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2011 / 2012 BUDGET PRESENTATION

2011 / 2012 BUDGET PRESENTATION. FORMAT. Available on website in order to save paper. Same format as last year. Fairly easy to interpret – based on “Function Code”. Some changes coming next year - Breaking out grant funds separately

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2011 / 2012 BUDGET PRESENTATION

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  1. 2011 / 2012 BUDGET PRESENTATION

  2. FORMAT • Available on website in order to save paper. • Same format as last year. • Fairly easy to interpret – based on “Function Code”. • Some changes coming next year - Breaking out grant funds separately - Differentiating FICA & Retirement from “Fringe Benefits”. • The initial budget is a “Best Guesstimate”. • Utilizes past history and most recent discussions and information. • This budget is a general guideline for the year. • The February “Revised Budget” is Key.

  3. 2010/11 RE-CAP • The initial 2009/10 projected deficit was ($765,000) • After audit, deficit had increased to ($2.5-Million) • The initial 2010/11 projected deficit was ($5.1-Million) • Projected $433 Reduction in Foundation Allowance - Saved by ARRA Funding - $630,000 - Saved by Edu-Jobs Funding - $1,015,000 • Anticipated loss of 100 Students, lost 36. • Lower than anticipated health insurance costs • Changes in other benefits (RX, Section 125, PA-106) • Anticipated balance as of June 30th, ($1.9-Million) • Better than anticipated – ($2.8-Million)

  4. 2011-12 GENERAL OUTLOOK • Starting 2011/12 with an anticipated ($1.9-Million) deficit • Economy “appears” to be accelerating. • State revenue outlook up. • ARRA funding ending. • New Governor / Republican philosophy. • Who’s getting the money? • Why not Public Education? • What about Proposal A? • Impact on School Districts - $470 per pupil permanent State Aid reduction • Unlike last year, this years budget is NOT worst case scenario. • Working together / not new at this. • Threat of Emergency Financial Manager

  5. THE BIG HITS • Things that will drastically affect the Districts budget in 2011/12: • Foundation Allowance Changes. • Southgate’s foundation allowance is currently $7,535 per pupil. • $470 per pupil “permanent” cut = ($2,468,910). • $100 per pupil add back for District incentives = $528,200* • $107 per pupil add back for MPSERS = $565,174* • Ending foundation allowance for 2011/12 is $7,065 per pupil. • Reduction in Property Tax Base. • $836,663,487 in 2010/11 vs. $740,633,639 in 2010/11 • Increase Property Tax Rate for Debt Payments to 5.15 mil • Anticipated reduction of 100 Students ($710,128) • Expiration of Federal ARRA Funds. • Anticipated employee step increases ($560,000) • * Probable one time adjustment.

  6. THE OBSTACLE • With the carry over of the ($1.9-million) projected deficit from 2010/11, the initial 2011/12 budget deficit before any expense reductions is anticipated to be: • ($5,527,294)

  7. THE THREAT • Emergency Financial Manager (EFM) • The Powers of an EFM • 18 “Red Flags” to qualify for an EFM. • Southgate School District has three. • Breaking the Law • When a District does not pass a balanced budget. • When a District overspends it’s revenues and fund balance • Deficit Elimination Plan • A good thing! • MUST follow the plan.

  8. THE PLAN OF ATTACK • KEY expense reduction/elimination items being discussed…. • Restructuring of District Custodial Operations* - $520,000 • Elimination of General Ed Transportation* - $645,000 • Employee Layoffs and Retirement - $1,410,000 • 5-6% employee salary/benefit concessions - $1,870,000 • Health insurance administrative savings - $250,000 • Closing of Anderson swimming pool - $80,000 • Employee step concessions - $310,000 • Cuts in discretionary spending - $350,000 • Other miscellaneous cuts - $161,431 • The TOTAL proposed reductions would equate to approximately: $5,596,431

  9. THE GOOD NEWS • The GREAT news is that these changes could bring the District out of deficit in June – 2012. • There has been MUCH collaboration with ALL of the employee bargaining groups. • The FIT (Financial Input Team) has been established to keep all units informed and on the same page. • The State is officially out of the recession. • There appears to be a sign that the State is seeing increased revenues, which should equate to stronger school funding.

  10. THE BAD NEWS • Stronger school funding is not in the forefront of the State government. Others are getting OUR money: - Higher Education / Corrections / Etc. (call your legislator) • These budget numbers are contingent on the outcome of the 2010/11 Budget. • The 2011/12 Budget represents an “Optimistic” viewpoint. • The State “Carrots” appear to be for only a one-year period. • Health Insurance costs are still climbing and questionable. • To achieve our financial goals, SO much needs to be sacrificed - Maintenance / Transportation / Other Jobs • Worst of all, if there are further cuts in 2012/13, they will end up reaching within the classroom.

  11. WE ARE NOT ALONE • One of the State requirements to receive back per-pupil dollars is to bid “non-educational” services such as Maintenance and Transportation. • In 2010/11, we were one of 43 districts in deficit in a State with well over 500 school districts in it. This year the number of deficit Districts could triple. • Districts all around us are eliminating/outsourcing services, reducing staff, demanding concessions, cutting programs, eliminating sports, and increasing class sizes.

  12. THINGS TO LOOK OUT FOR • Mid-Year reduction from State • Increase in health insurance and prescription costs. • Another increase in retirement in 2012/13 (to 27%) • Loss of additional students. • Higher than anticipated energy costs. • Low funds for equipment replacement. • Falling State scores and/or drop out rate.

  13. THINGS WE CAN DO • Save on Health Insurance Costs. • Self Funding - District pays for every health care dollar spent • Wellness Plans and Health Savings Programs. • Energy awareness and conservation. • Eliminate stigma regarding Special Education. • Increased use of bidding and use of consortium bids • Consolidating services with surrounding entities - Technology / Voc-Ed / Admin Building / Other?!? • Continue to use technology and create new efficiencies. • Assess school saturation levels and plan for school closing(s). • New Grants. • Parent Involvement • User Groups and Communication!

  14. BOTTOM LINE IS THE BOTTOM LINE?!? • The 2011/12 School year will undoubtedly be the worst financial year EVER for school districts. • A lot has been done to keep our heads above water, we must keep treading water. • The FIT will work closely to help keep the budget on line. • Potential for two-year “flexible” contracts to help us proportionally reduce expenses and proportionally share in the District financial successes. • Follow new Strategic Plan to keep us focused on the REAL bottom line… OUR STUDENTS!

  15. WHAT WE NEED TO DO - LONG TERM • Work together as ONE entity…ONE family • School District and Community • Administration and Bargaining Groups • A successful Southgate School District means: • More families wanting to attend our schools. • Better home sales & higher property values. • More funding for classes and other programs. • Work on “positive press” including: • Sports programs • Music programs • Most importantly…academics

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