Planning for the worst
ALPENA — School districts have approved very conservative budgets for the upcoming school year as they await word from Lansing about how much state revenue they’ll receive.
Every district and college had to budget carefully, since the Legislature is taking longer completing its budget than it has for the past several years. Some K-12 superintendents aren’t expecting a completed budget until fall or even past Oct.1, when the state’s fiscal year begins. If the state budget is not completed by Oct. 1, state government shuts down.
In Northeast Michigan, some districts are projecting large decreases in revenues, forcing them to cut costs and use up some of their fund balance, or cash on hand.
In total, seven of the eight districts in Northeast Michigan, plus Alpena Community College, are projecting a combined $586,833 fall in revenue, a $7,694 fall in expenses, and a more than $1 million in fund balance by next summer. Posen Consolidated Schools did not respond to messages seeking comment for this story.
Hillman Community Schools expects its fund balance to drop from $514,634 to $50,106 by the end of next school year, while Atlanta Community Schools’ fund balance would fall from $140,204 to $52,359. That fund balance is what schools use to pay bills and cut paychecks while they wait for payments from the state.
Carl Seiter, superintendent of both Hillman and Atlanta, said the biggest issue is actually not the state, but student enrollment. Michigan schools are paid by the state based on the number of students they have. Last year, each student was worth $7,871.
Seiter said both districts expect to lose more high school seniors than they gain in kindergartners.
Hillman will lose approximately $135,000 in one year because of enrollment. The district is predicting 401 students, down from 411 last year.
“We utilize a three-year blend for our funding formula, so what that means is that the state funds our student count for the past three years,” Seiter said. “If the average is higher than our actual count, we receive a higher amount of funding.”
In addition to falling enrollment, some reasons for Hillman’s budget shortfall are the purchase of two used buses and losing payments to Hillman by Atlanta and the Alpena-Montmorency-Alcona Educational Service District for literacy coaches.
Hillman is expected to make approximately $276,533 in cuts to balance its budget. That includes layoffs for paraprofessionals, support staff, and a cook. Seiter said he is looking at more things that could bring the total of cuts to over $300,000.
Seiter said Atlanta will not hire new employees unless necessary, though he does not see any layoffs coming to the district.
Seiter said there are unknowns that district officials statewide are dealing with. Because they don’t know what their state aid will be, districts have to take a conservative budget approach.
Revenues, expenses, and fund balance are also expected to significantly decrease for Alcona Community Schools for the 2019-20 school year.
Business Manager Nick Cordes said it’s a common trend for districts to budget conservatively. He said there are still unknowns regarding revenue sources, and the district didn’t want to over-budget or over-project anything.
A new bus costing approximately $102,000 also hit Alcona’s budget.
The district is projecting 665 students the 2019-20 school year, down from 687 from the district’s spring count. The district plans to add a new staff member because of student needs.
“We’re heading in the right direction, so we’re not worried,” Alcona Superintendent Dan O’Connor said. “We will continue to chip away at the fund balance and just hope that the state budget is better than what we think it will be.”