BELDING — Financial hardship continues to be a trend among area public school districts due to cuts in state funding and the status of the state economy and Belding Area Schools is no exception.
Members of the Belding Area Schools Board of Education voted unanimously Monday evening to accept the 2013-2014 budget of the general and athletics funds for the district.
The current projection for the new budget shows a decrease in revenue from the previous fiscal year and an increase in expenditures, putting further hardship on a district that is projected to see a decrease in districtwide enrollment by approximately 27 students.
“I appreciate the hard work that’s gone into this new budget in going over all of the potential revenues, as well as the expenditures that could be trimmed,” Board President Tom Humphreys said.
With an estimated revenue of $17,241,060 for the district and $17,927,429 in expenditures, the district finds itself operating with a deficit of $686,369.
After factoring the deficit into the district’s fund balance of $2,353,706, the estimated fund balance at the end of the 2013-2014 fiscal year will be $1,667,338.
“Right now, (the budget) is our best guess,” Superintendent Sara Shriver said. “We feel the information that has come to us from each organization working on this was reliable. We have used that information and shared it with our staff through a process called ‘budget assumptions.’ There are many unknowns, but those unknowns are going to make a difference in a positive way.”
That trend of operating with a deficit budget is not new to the district, as just five years ago the district operated with a remaining fund balance of more than $4 million.
“While (the budget) isn’t exactly where we would like it to be as far as a final fund balance, I think it’s pretty good given the state of the economy and the state of state funding for schools,” Humphreys said. “We haven’t had to go through and make any tremendous cuts in any of the education programs. Hopefully we’ll see some turnaround with that in the coming year.”
According to Finance Director Adrienne Barna, who gave a brief presentation on the budget during a public hearing on the proposed budget prior to the council vote, the underlying problem resulting in a deficit budget stems from the projected decrease in student enrollment.
In response to the budget, two teaching positions will be eliminated as a cost-savings measure after board members approved a resolution Monday evening.
Ellis Elementary School kindergarten teacher Victoria Meyer and Belding High School special needs teacher Sandra Curran will be placed on layoff status effective June 30.
“Following our process of budget reductions and being fiscally responsible, anticipating that we will have less students next year, as we worked on the budget we knew we were going to have to remove some positions,” Shriver said.
According to Shriver, Meyer and Curran will have the chance to return if the district’s financial conditions improve before the beginning of the 2013-2014 school year as long as both teachers are certified and highly qualified.
Members of the school board voted unanimously Monday evening to accept a resolution allowing cash flow borrowing against state aid in the amount of $1.5 million.
According to Barna, the district will have to borrow in the amount of $1.5 million in order to avoid cash flow shortages in the month of January for the 2013-2014 fiscal year.
“For the past two years we’ve borrowed $1.3 million, which has been enough to cover, but as we’ve been deficit spending for the past few years, we did ask to bump it up to $1.5 million this year.”
Barna said the issue with a financial shortfall in January lies with the financial aid provided from the state, which does not come in to the district until Oct. 20.
The district’s fiscal year begins on July 1 while the state’s fiscal year begins on Oct. 1.
“We start paying people in August,” she said. “That generally catches up with us in a month where you have two payrolls that fall before our state aid comes in on the 20th of the month.”
The resolution will give the district the option to borrow through the Michigan Financial Authority or through local banks.
According to Humphreys, in the previous two years the district has turned to local banks, which have provided more favorable interest rates.
Because paying back the interest on the loans is a large burden on the district’s budget and overall fund balance, in March of 2012 members of the school board approved a measure to send a resolution to stop borrowing against the state to the desk of Gov. Rick Snyder, asking for the state to reimburse Michigan public school districts for any interest paid on loans taken to meet expenses before the October school aid payment.
Belding Area Schools was one of several districts statewide to participate in sending a resolution to Snyder, but no action has been taken to date.