public schools of petoskey
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Public Schools of Petoskey. Budget Update & Outlook September, 2004. Last Time We Met…. February 2003 – State had just sent Executive Order cuts to all districts. Per Pupil Allowance at start of year had been set at $6,700. - PowerPoint PPT PresentationTRANSCRIPT
Public Schools of Petoskey
Budget Update & Outlook
September, 2004
Last Time We Met….
February 2003 – State had just sent Executive Order cuts to all districts.
Per Pupil Allowance at start of year had been set at $6,700.
Executive Order in Feb. 2003 reduced the per pupil allowance by 3.8%; approximately $60 per pupil.
Cost to PSP: $188,411
The Belt Tightening Begins
Between Feb. 2003 and June 2003 we: Reduced supply budgets 20% Reduced conferences and reimbursements Eliminated remaining major equipment purchases Restored full 18 mills on non-homestead property taxes
End Result Budgeted Loss for FY 02-03: $213,049 Actual Result: Gain of $188,471
Per Nov 2003 MSBO survey
What Did Other Districts In Michigan Do?
In response to their budget issues in FY 2002-03 303 (58%) districts laid off employees. 366 (70%) did not fill open positions. 188 (36%) eliminated programs or services. 288 (55%) increased class size. 147 (28%) froze salaries and benefits for some employees. 277 (53%) reduced or eliminated field trips. 115 (22%) reduced transportation services. 246 (47%) deferred maintenance on existing facilities.
Refresher on State Aid:State Aid Formula
(# Pupils Multiplied by
Per Pupil Foundation Allowance) Less
(18 mills X District Non-Homestead TV) Equals
Amount State pays the district
State Aid Key Points
Pupil count is an uncontrollable variable. Per Pupil Foundation Allowance is set by the State.
($6,700 for 02-03,03-04 & 04-05). This is the minimum any district receives.
Amount of $$ sent from Lansing to PSP is reduced as our property values increase.
INCREASED PROPERTY VALUES DO NOT EQUAL MORE MONEY FOR SCHOOLS!!!
How the Per Pupil Allowance is Split Between Taxes & State
State - Foundation
37%
Prop Taxes63%
From Standard & Poor’s Latest Report
The District’s state-source operating revenue per student is exceptionally below the state average, and lower than the peer group average.
Statewide, only 3.8% of Michigan’s school districts receive less per-student revenue from state sources than the district.
What Does All This Mean?
As the property values in the Petoskey area increase, the benefit of the increased property tax revenue does not accrue to Petoskey Schools.
The State of Michigan benefits, as the amount of money sent from Lansing decreases as the local property tax revenue increases.
Major Revenue Sources
Prop Taxes57%
State - Foundation
33%
ISD3%
State - Categorical
3%
Federal2%
Other Local2%
Major Expenses
SALARY55% RETIREMENT
8%
FICA4%
EMPLOYEE INSURANCE
15%
OTHER EXPENSES
18%
Transportation
4%
Instructional Staff Support
4%
Business Services
1%
Operation and Maintenance
10%
Instructional
Programs
68%
Support
Services
32%
Pupil Services
3%
Tranfers to
Athletics
2%
Community
Support Services
0.4%
School
Administration
6%
General
Administration
2%
Instruction to Support Costs Comparison
Observations About PSP by Standard & Poor’s
On a per-student basis: the district’s instructional expenditures are comparable to
the state average, but higher than the peer group average. the district’s operating expenditures are moderately
below the state average, but comparable to the peer group average.
Statewide, 18.1% of Michigan’s school districts spend less per student on administration than the district.
Statewide, only 9.2% of Michigan’s school districts spend less per student on central administration.
More Data from Standard & Poor’s
How We Compare With Other Districts
The Budget Dance Continues – FY 2003-2004
State set per pupil foundation allowance at $6,700.
In November, State once again issued cuts to schools. This time cut was $74 per pupil.
Cost to PSP: $228,797
FY 2003-2004 Budget Changes: Revenue Losses
State Ordered Per Pupil Cuts State Drivers Ed Funding Lost
Total Revenue Losses
$ 228,797
26,415
$ 255,212
FY 2003-2004 Budget Changes: Cost Increases
Salary & Fringe Increases Property / Casualty Insurance Transportation Cost Increases
Total Cost Increases
$ 1,080,066
16,791
37,792
$ 1,134,649
FY 2003-2004 Budget Changes: Revenue Increases
Increased Pupil Count Increased Tuition & Fees Misc. Other Sources One Time Revenue Sources
Sale of Property & Equipment Special Ed Reimbursement
Total Revenue Increases
$ 60,00096,48651,853
81,970 290,323
$ 580,632
FY 2003-2004 Budget Changes: Cost Cuts Made
Program Cuts Energy Conservation Measures Supplies Major Equipment Hiring Delays / Reductions
Total Cost Cuts Made
$ 58,131
77,237
159,678
252,158
36,961
$ 584,165
End Result – FY 2003-2004
Had we not changed a thing on how the district spends its money, we would have lost $1.7 million.
Instead, we made cuts, looked for new revenue, scrimped on spending, saved our pennies and nickels for the entire year and…..
And instead of losing $1.7 Million, our loss came in at only $36,500.
Per K-16 Coalition for Michigan's Future survey
And What Did Other Michigan School Districts Do?
273 (52%) laid off employees (approximately 5,900 laid off state-wide).
393 (75%) did not fill open positions. 277 (52%) increased class sizes. 434 (83%) reduced supply budgets. 273 (52%) deferred maintenance on existing
facilities. 189 (32%) froze salaries and benefits for some
employees.
And That Brings Us to FY 2004-2005
As of September 27, we are still waiting on a State Aid bill, which sets the per pupil allowance……
Which means our budget, required by law to be adopted by June 30, is using an assumption for its main source of revenue!
Per Pupil Allowance – FY 2004-2005
The State is indicating the per pupil allowance will be $6,700 for a third year in a row.
If we get the full $6,700 it will be the first time; we have been cut in each of the other two years.
State economy is lagging behind projections, so our assumptions for the budget set the per pupil allowance at only $6,650.
General Fund Budget FY 2004-2005
Total Revenues Total Expenditures Excess Expenditures Est. Fav. Budget Variance Est. Use of Fund Balance Fund Balance:
June 30, 2004 June 30, 2005 (Est.)
$23,214,589 24,904,579(1,689,990) 366,468(1,323,522)
$3,678,452$2,354,930
So What’s The Big Deal?
We turned a possible $1.7 million loss in 2003-04 into an almost break-even actual result.
So why can’t we do that again in 2004-05?
The Budget Cutting Has Already Happened
We have already cut an additional $574,000 out of the budget for FY 2004-05, and created $153,000 in additional revenue. Three year total of cuts is approx. $1.7 million. Three year total of new revenue sources is approx. $1.2
million. We have cut for three years in a row now. The easy cuts are well behind us. We have no more “rabbits to pull out of the hat”.
FY 2004-2005 Budget Changes: Revenue Decreases
Anticipated Reduction of State Aid Grants & Misc. Reductions Loss of One Time Revenue Sources
Used in 03-04
Total Revenue Decreases
$ 149,078
26,118
372,293
$ 547,489
FY 2004-2005 Budget Changes: Expense Increases
Salary & Fringe Increases Add 1 Special Ed Teacher Add .5 Developmental Kindergarten Teacher Transportation Contract Increase Transfer to Athletic Fund for Coaches Salaries Property / Casualty Insurance Increase Utilities & Services Increases
Total Expense Increases
$ 1,454,83656,24432,54620,95925,68815,675
61,017
$ 1,666,965
FY 2004-2005 Budget Changes: Revenue Increases
18 mills non-homestead property tax restoration
Tuition / Rent Increases
Total Revenue Increases
$ 127,353
25,977
$153,330
FY 2004-2005 Budget Changes: Cost Cuts Made
Staffing Reductions Administration Aides Secretaries Custodial / Maintenance All Other
Savings from Retiring / New Staff Pay Differential Shift Staffing Expenses into Grants Supplies & Services Reductions
Total Cost Cuts Made
$ 85,365 31,649
40,32281,84246,179
157,91557,914
73,056
$ 574,242
Per K-16 Coalition for Michigan's Future Survey
Any Idea What Other Districts Will Do?
215 (41%) will lay off approx. 2,400 employees. 77% of these districts expect teachers to be among those laid off.
330 (77%) will not fill open positions. 226 (52%) will increase class size. 90 (21%) will reduce the number of school days. 135 (26%) will increase student fees for extra-
curricular activities.
Per K-16 Coalition for Michigan's Future Survey
Any Idea What Other Districts Will Do?
256 (59%) will reduce budgets for professional development.
265 (61%) will attempt to freeze wages and fringes. 154 (36%) will reduce hours for some existing staff. 217 (50%) will delay the purchase of new textbooks.
340 (79%) will spend from their savings.
One Cost Cutting Suggestion We Have Not Implemented
General Fund Budget FY 2004-2005
Total Revenues Total Expenditures Excess Expenditures Est. Fav. Budget Variance Est. Use of Fund Balance Fund Balance:
June 30, 2004 June 30, 2005 (Est.)
$23,214,589 24,904,579(1,689,990) 366,468(1,323,522)
$3,678,452$2,354,930
Taking a Moment to Celebrate Our Success
According to S&P: Well above average MEAP excelling rate. Well above average MEAP passing rate. Moderately above average ACT scores. Well above average AP scores.
“Relative to other school districts in Michigan, Petoskey Public Schools achieves well above-average student results with moderately below-average spending per student.”
Now a Look Into Our Crystal Ball
The Picture FY 2005-2006 and Beyond
Major Assumptions Used: Modest increases in per pupil allowance. Flat enrollment. Minimal increases in salaries. 15% - 18% increases in fringe benefit costs. Hiring freeze. No increase in supplies, major equipment
purchases, or services.
The Picture FY 2005-2006 and Beyond
FY 2005-06 FY 2006-07
Total Revenue $23,090,184 $23,885,462
Total Expenditures 25,994,888 27,340,339
Excess Expenditures (2,904,704) (3,454,877)
Fav. Budget Variance 388,229 406,374
Use of Fund Balance (2,516,475) (3,048,503)
Fund Balance
Beginning of Year $2,354,930 $ (161,545)
End of Year $ (161,545) $(3,210,048)
So What Does This All Mean?
The District will be bankrupt at the end of FY 2005-06 unless: Significant revenue increases are granted by the
State. Significant cuts in spending are enacted.
How Did We Get in this Situation?
Three years in a row of flat or declining revenue. Decline in revenue is caused by a structural
imbalance in the State’s budget. The poor economy is only partly to blame for the
State’s budget problem: Since 1994, the legislature has enacted tax cuts that
directly impact the funding of our children’s education by $550 million a year.
Per Pupil Revenue and Expense History
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Expense Per Pupil Revenue Per Pupil
Why Not Use Fund Balance?
We Are!! But we will still be bankrupt by the end of FY
2005-06. Financially sound Districts maintain some
amount of fund balance for many reasons: Cash Flow Emergencies Protect programs and services
So Where Do We Go From Here?
Continue to look for ways to save on costs. Your ideas are important. Please let us know!
Budget Planning Calendar – Plan in place by Spring 2005.
Talk to your Legislators! Tell them education is important, and should be funded as if it
is important. Fix the structural deficit that exists in the current funding
mechanism. Waiting to fix things until there is “blood in the streets” is not
acceptable.
Questions and Answers