birmingham public schools board study session october 6, 2009

Birmingham Public Schools

Board Study Session

October 6, 2009October 6, 2009

Review of 5 Year History

  2004-05 2005-06 2006-07 2007-08 2008-09

Foundation Allowance 11,755 11,930 12,140 12,188 12,244

Change 74 175 210 48 56

% Change 0.63% 1.49% 1.76% 0.40% 0.46%

CPI Adjusted 11,755 12,202 12,499 12,871 12,682

  2004-05 2005-06 2006-07 2007-08 2008-09

Enrollment 7,976 8,035 8,079 8,022 8,017

Change 110 59 44 -57 -5

% Change 1.40% 0.74% 0.55% -0.71% -0.06%

  2004-05 2005-06 2006-07 2007-08 2008-09

Revenues (State Formula) $95,636,906 $97,906,925 $98,079,060 $97,772,136 $98,160,148

Other Revenues $6,439,905 $7,514,640 $9,393,656 $10,648,854 $7,704,538

Total Revenues $102,076,811 $105,421,565 $107,472,716 $108,420,990 $105,864,686

Transfers ($3,015,801) ($3,035,108) ($2,190,448) ($1,686,043) ($3,084,413)

Net Revenues $99,061,010 $102,386,457 $105,282,268 $106,734,947 $102,780,273

Net Revenue % Change 1.95% 3.36% 2.83% 1.38% -3.71%

2004-05 2005-06 2006-07 2007-08 2008-09

Salaries 62,462,612 62,185,094 65,078,043 61,785,532 55,876,277

FICA & Retirement 13,949,151 14,826,792 16,523,315 15,057,134 13,516,471

Employee Insurance 12,469,358 13,082,408 12,573,231 13,488,954 12,490,975

Capital Outlay 770,652 580,137 239,056 69,925 2,333,789

Utilities 3,162,801 4,020,431 4,321,708 4,837,563 Salaries 4,121,192

Other Costs 6,410,379 6,803,951 6,615,507 8,036,520 13,967,924

Total Expenditures 99,224,953 101,498,813 105,350,860 103,275,628 102,306,628

Adjusted for CPI 99,224,953 102,995,501 105,498,292 115,837,124 114,134,318

%Change 1.44% 2.29% 3.80% -1.97% -0.94%

  2004-05 2005-06 2006-07 2007-08 2008-09Total Expenditures 99,224,963 101,498,813 105,350,860 103,275,628 102,306,628

% Change 1.44% 2.29% 3.80% -1.97% -0.94%Total Revenues 99,061,010 102,386,457 105,282,268 106,734,947 102,780,273% Change 1.95% 3.36% 2.83% 1.38% -3.71%

Excess/Deficit (163,953) 887,644 (68,592) 3,459,319 473,645

BUDGET DEVELOPMENT PLANSExpense Reductions

Total Instructional Support

2002-03 $ 721,550 $ 276,500 $ 445,050

2003-04 $ 3,854,786 $ 2,078,750 $ 1,776,036

2004-05 $ 3,381,390 $ 2,551,500 $ 829,890

2005-06 $ 2,939,572 $ 2,189,462 $ 750,110

2006-07 $ 2,659,950 $ 1,760,000 $ 899,950

2007-08 $ 2,317,494 $ 1,503,250 $ 814,244

2008-09 $ 3,869,582 $ 237,872 $ 3,631,710

2009-10 $ 3,063,675 $ 1,702,044 $ 1,361,631

Total $ 22,807,999 $ 12,299,378 $ 10,508,621

2009-10 Budget $ 105,147,340 $ 81,960,416 $ 23,186,924

% Cut 22% 15% 45%

2009-2010 State School Funding Update :

1. October 1, 2009, Governor signed 30-day continuation budget. October 20, 2009 State Aid payment may result in a “negative adjustment” of $160,323.Annualized “negative adjustment” is approximately $1.7 million.

2. Foundation Allowance Sensitivity Data: $50/per pupil = $392,000

$100/per pupil = $784,000

3. Enrollment Sensitivity Data: 1 FTE = $9,100 10 FTE = $91,000

BIRMINGHAM PUBLIC SCHOOLSBOARD STUDY SESSION

OCTOBER 6, 2009

BIRMINGHAM PUBLIC SCHOOLSBOARD STUDY SESSION

OCTOBER 6, 2009

State School Funding Update: 2010-2011 2011-2012

If…. Assumptions:1)No State Aid Act2)No ARRA of 2009 - Education Stabilization grant3)Taxable Values remain the same4)Enrollment Projections remain the same

Then… Current Case Scenario:1)Per pupil shortfall could be approximately $600 per FTE $ (4,800,000) $ (4,800,000 )

2)State allocated 20(j) dollars could be eliminated $ (954,000) $ (954,000)

3)Birmingham Public Schools structural deficit (Range $3 - $4 M annually) $ (3,000,000) $ (3,000,000)

Current Case Scenario total budget shortfall $ (8,754,000) $ (8,754,000)

Not just a Birmingham Public Schools Issue...

• Deficit Districts

• Oakland Schools

• Other “Borrowing” Districts

BIRMINGHAM PUBLIC SCHOOLSBOARD STUDY SESSION

OCTOBER 6, 2009Preliminary Budget Development Timelines:

Date Activity

August 2009 Begin Budget Development Process

September 2009 Review prior fiscal year results (June 30, 2009)Develop preliminary budget development target (forecast)

October 2009 Review preliminary financial forecastRecommend preliminary budget reductions/revenue enhancements

October 27, 2009 Community ConversationsNovember 5, 2009

BIRMINGHAM PUBLIC SCHOOLSBOARD STUDY SESSION

OCTOBER 6, 2009Date Activity

November 2009 - Collect financial data, staffing, finalize enrollment forecasts, etc.

December 2009 Continue to compile restructuring/repurposing informationAmend current fiscal year results (June 30, 2010)

January 2010Present final forecast; budget development targetsReview preliminary budget reductions/revenue enhancements

January 2010 – March 2010

Prepare preliminary budget, review forecast assumptions Continue to gather feedback, restructure and repurpose budgets

TBD Community ConversationsTBD

BIRMINGHAM PUBLIC SCHOOLSBOARD STUDY SESSION

OCTOBER 6, 2009Date Activity

March 2010 Review budget progress Release staff allocations based on enrollment, restructuring/repurposing

March 2010 - Disseminate preliminary budget and impact information toMay 2010 the staff and community

Receive feedback and modify where appropriate

May 2010 Update taxable value informationFinalize budget development process and review preliminary budgets

June 2010 Public Hearings on 2010-2011 budgets and millagesAdopt 2010-2011 budgets and millages

Work Areas to Review….

Fund Equity

Board Policy 6215:

1. Maintain Cash Flow Stabilization Fund to operate District without borrowing

2. District limit use of Fund Equity to smaller of:3% Anticipated Expenditures

or20% Unrestricted Fund Equity

3. At June 30, 2009, approximately $3,045,000

Sale of FacilitiesReviewed 4 Currently Non-Instructional Use Facilities:• Meadow Lake Elementary• Midvale Elementary• Administration Building• Lincoln Street Property

Currently, 2 of the 4 available for sale are under request for proposal:

• Administration Building• Lincoln Street Property

Sale of Facilities Issues:

1. Distribution Costs for Fuel Storage Tank2. Relocation Costs for Administration Staff

and/or Lincoln Street Alternative3. Highest and Best Use – Zoning, Price,

Viability of Buyer

Capital Projects Needs

• Required by law, code or licensing$530,000

• Required by safety or liability prevention $458,000

• Short-term annual repair of assets$442,000

• Long-term annual replacement $2,792,000

Issue: Only current funding source is General Fund

Technology InvestmentTotal Technology Investment to Date: $42,000,000

Necessary Technology Replacements:2010-2011 $2,690,0002011-2012 $1,970,0002012-2013 $4,515,0002013-2014 $6,765,000

$15,940,000

• Issues: Only current funding source is the Capital Equipment Fund

• Proceeds from sale of facilities?

Energy Management

Board Policy 8910:1. Purchase energy effectively2. Use Energy Efficiently

A. General regulations for building operationsB. Guidelines for operating lighting equipmentC. Regulations for heating, ventilating, and air conditioning

(HVAC) systemsD. Unoccupied hours-school vacation days, weekends and

holidaysE. Windows and doorsF. Classroom and building personal equipment

3. At June 30, 2009, savings in energy procurement was approximately $205,000

Administrative Staffing

1. Continue to evaluate Administrative staffing, at all levels, using like-district benchmarking when appropriate

2. Review equitability of staff between departments and among buildings

3. Review all levels, top to bottom, Instructional and Non-instructional staffing

Line-Item Budgets

• Supplies• Textbooks• Professional Development Costs• Non-Athletic Teams and Activities Costs• Repairs• Capital Outlay

Efficiencies in Cost Sharing

1. Privatization of Transportation Services with Durham School Services

2. Privatization of Custodial Services - GCA Service Group3. Other opportunities in contracting:

A. Lawn mowing and leaf blowingB. Environmental servicesC. Rubbish removalD. Substitute teaching staffE. Non-staff athletic coaches

Transportation Services

2007-08 Actual Expenses

2008-09 Actual Expenses

Total Cost of Transportation Services $ 3,457,729 $ 3,328,262

Special Education Bus Aides $ (79,969) (2) $ (184,848) (5)

Clawson Bus Repairs $ 95,880 $ -

Adjusted Total Cost $ 3,473,640 $ 3,143,414

Difference between 2007-08 and 2008-09 expenses $ 330,226

Plus savings in Worker's Compensation Costs $ 202,837

Net Savings $ 533,063 *

* Does not reflect one-time additional unemployment expense: $160,051

Note 1: Savings does not reflect purchase of school buses. On average, eight buses were purchased annually at an estimated cost of $600,000Note 2: Budgeted potential savings: $507,700 - $650,000

Custodial Services

2007-08 Actual Expenses

2008-09 Actual Expenses

Total Cost of Custodial Services $ 5,692,868 $ 3,246,792

Difference between 2007-08 and 2008-09 expenses $ 2,446,076

Plus savings in Worker's Compensation Costs $ 155,110

Net Savings $ 2,601,186 *

* Does not reflect one-time additional unemployment expense: $114,860

Note 1: Savings does not reflect lower cost of departmental overtime (i.e. Principal, Athletics, Community Ed.). This is estimated at $500,000Note 2: Budgeted potential savings: $2,293,010 - $2,713,610

Collaboration and Program Partnering

1. Purchasing - Use of Cooperative Purchasing through Oakland Schools, and the State of Michigan (example: REMC bid for hardware and software purchasing)

2. Technology – Internet connectivity, Follett Library Automation, Web filtering

3. Business Services - Third-Party Administration of District’s 403 (b) Plan

4. All programs under review….

Generating Additional Revenue For the Year

Ended 6/30/09 1) Rental of Facilities YTD (gross) $ 921,142

2) Birmingham Conference Center (net) $ 135,000

3) Tuition Enrollment Program (gross) $ 187,177

4) Community Education Recreational Programs (gross) $ 729,285

5) Partnerships with PTA's, CSO's, BEF and grants (Building sign projects, Promethean Boards, equipment, etc.)

6) Other

Labor Costs

1. Service industry, therefore majority of costs are personnel related.

2. Six collective bargaining groups, five agreements expiring June 30, 2010.

3. 2009-2010 salary, FICA & retirement @ $71.9 M4. 2009-2010 insurance benefit cost @ $14.0 M5. 2009-2010 total staff costs @ $85.9 M (82% of total)6. Recent changes to labor agreements include…

A. Off-schedule salaryB. Contributions to health insurance

C. Other cost savings (sick banks)

Budget Development Guiding Principles

1. _________________________________2. _________________________________3. _________________________________4. _________________________________

Summary Points

• We have been good fiscal stewards.• We are facing a $16 M problem over the next two

years.• Although the financial problems will cause us to

restructure, we will continue to provide a first-class education.