|
More School Districts Falling Into Deficit
Gongwer News Service, November 25, 2006
The number of public school districts in deficit spending has
doubled in the last three fiscal years, as has the number of
districts carrying less than 15 percent of their revenue in a
fund balance, a magic number for cash flow.
And the numbers of districts on tight or negative budgets could
grow further in the current fiscal year if budget estimates come
in below earlier expectations.
Tom White, executive director of the Michigan School Business
Officials who compiled the information from that given to the
Department of Education, said revenues for the School Aid Fund
could come in as much as $300 million less than the targets on
which the current budget is based.
"What I see is a march to the edge of the cliff," Mr. White said
of school finances.
And William Mayes, executive director of the Michigan
Association of School Administrators, said the problem will
continue to get worse until the state takes another look at
school funding - and state revenues in general.
"We do not have enough money in the state to provide the
services and to provide the education the citizens of the state
feel is so important," Mr. Mayes said. "Until we have the
courage to look at some of these structural issues, structural
problems, we will continue to have school districts and local
governments having problems."
For the 2005-06 school year, there were 20 districts in deficit
and 309 carrying less than 15 percent fund balances, according
to numbers compiled by Mr. White based on information from the
Department of Education. That is up from 14 in deficit and 274
under 15 percent in 2004-05 and 10 in deficit and 160 under 15
percent in 2003-04.
And of the 14 with deficits in 2004-05, 10 are still on the list
for 2005-06.
Mr. White said the numbers go up if public school academies are
included. Though he did not have figures on charters (public
school academies) with deficits, he said including them in the
count increased the number of districts with less than a 5
percent fund balance to 133 from 81 with them excluded.
"That's not to point fingers at the PSAs but to say it's all
schools," he said. "The PSAs have typically operated a little
closer to the line because of the nature of their business."
And the numbers for 2005-06 do not include Detroit Public
Schools, which is technically in deficit but was allowed to sell
deficit reduction bonds to cover the shortfall.
Though state law requires those districts spending more than
they brought in to develop deficit reduction plans, Mr. White
argued that some of the districts would have a tough time
climbing out. White Pine School District in the Upper Peninsula
has 95 students and an operating budget of $272,922. But of
that, $125,765, or 46 percent, is deficit.
Ewen-Trout Creek Consolidated School District, also in the UP,
is in slightly better shape with 326 students and a budget of
$3.78 million. Its $1.24 million deficit is only 32.7 percent of
its operating funds.
"I don't know what they can do," Mr. White said. "They are the
canaries in the cage in terms of the school finance problems
we're having."
Education spokesperson Martin Ackley said White Pine has solved
its problem by essentially dissolving and sending its children
to Ewen-Trout Creek and Ontonagon schools, keeping some of the
revenue to pay off its debt.
How bad the situation becomes for other districts depends on
what cuts might have to be made to the current state budget.
Already, the 2006-07 School Aid Fund budget is short because the
anticipated $94 million surplus for 2005-06 actually became a
$24 million deficit. Correcting for the assumptions that led to
that missed target could leave the current budget some $240
million short, Mr. White said in an analysis he sent to members
of his organization.
That shortfall could be further exacerbated by revenues, which
have been coming in at less than projections.
If that shortfall means cuts in the middle of the school year,
that could push many of those districts with less than 5 percent
fund balances, about 80 districts to no balance or less.
"When you get cuts in the middle of the year, you don't really
have a lot of options," Mr. White said. "It's difficult to let
enough people go in the middle of the year to make a
difference."
He said cutting staff also often means cutting programs, which
would mean taking children out of those programs they have
already begun.
Mr. Mayes said districts and intermediate districts have already
been cutting and consolidating. "We've cut the fat. Now we're
cutting bone," he said. "In some instances hurts children's
options."
He said music, art and physical education programs are often the
first to be cut. "Those for some students are the thing that
keep them involved so closely," he said.
Schools do still have some opportunities for savings, Mr. Mayes
said. Many districts and ISDs have been sharing programs and
administration to spread the costs of those programs across
several districts.
"As programs are reduced, we do rely more on sharing resources,"
he said.
But he also said there are limits to that sharing, particularly
in the Upper Peninsula where a joint program could mean putting
students on a bus for an hour or more one way.
Mr. Mayes also said sharing programs does not cut significantly
into one major source of cost increases: employee benefits. The
administrators are pushing a package of bills that would give
them more control over employee health care and pension benefits
in an attempt to cut costs.
Michigan Education Association officials have maintained that
the benefits changes being proposed would not mean any cuts in
expenses and would make it more difficult for school districts
to recruit good teachers.
For those districts below 15 percent fund balances, they may not
face cuts right away, but they could face some additional costs.
Because of the way the state allocates aid payments, Mr. White
said those districts that have them use their fund balances at
the beginning of the year with the expectation that later aid
payments will replenish the balance. A cut to state funding
would mean that money would not be available next school year
and districts would have borrow money for operating funds at the
beginning of the year.
back to the top ~
back to Breaking News
~ back to
What's New
|
