District Pares $3 Million from General Fund Budget

The Dearborn School Board and members of the public have a better idea of what business environment will look like at Dearborn’s schools now that a final version of the proposed 2011-12 budget has been rolled out.

The proposed for 2011-12 budget is $161.8 million–which is $3 million less than the $164.8 of expenditures projected for the same period, and $8.4 million less than the budget for 2010-11–contains personnel cuts, special education staffing re-alignments,  wage and benefit concessions, reductions in contracted services, and utility cutbacks and enhancements. The latest version of the budget will likely be approved at the board’s study session on June 27.

The $3 million in cuts are in addition to $7 million in cuts the district will make because of a loss in categorical funding for at-risk students and bilingual education, which resulted in the . The board voted Monday night to pink slip the teachers in accordance with its collective bargaining agreement with the Dearborn Federation of Teachers.

Bob Cipriano, the director of business services, said the budget is likely to be approved at the regular July 27 study session, and filed with the state in accordance with Michigan law.

Revenue

• Revenues have inched down, from $170.2 million in 2010-11 to $161.8 million in 2011-12, leaving a $3 million void for the 2011-12 school year. The reason for the deficit is a decline in property taxes, which fell by another 10 percent this year and are expected to fall another 5 percent before property values stabilize, Cipriano told the board.
• Additionally, cuts in state-shared revenue—this year it was $470 per students for Dearborn—was a drain on the 18,500-student district, including cuts made to categorical funding, which created a $7 million hole in addition to the $3 million gap in the general fund budget.
• The tax rate will go up within the confines of the mills the district is allowed to levy without voter approval. The mills assessed for debt service will go up from 4.84 last year to 5.36 this year, and the hold harmless mills will increase to 5.5982, from 5.0613.
• The district could recover $100 per student, for a boost of about $2 million, if the state agrees that it meets predetermined requirements for additional funding. The fact that the district is not the policyholder on health insurance for its teachers is holding that decision up, Cipriano said.
• Cipriano said the budget is to some extent still a moving target that officials will monitor.

“We have no idea when a decision will be made about the additional $100, but when we find out, we’ll make the adjustment,” he said.

Cuts

• Expenses have also come down from $170.2 million last year to $164.8 million this coming year, but that’s not enough to meet projected revenues from this year, leaving the district with a $3 million general fund shortfall, or a $10 million deficit when categoricals are added in.
• Special education cuts have implemented to the tune of $500,000. The cuts were achieved by realigning positions within the department to create more flexibility, and adding additional classrooms in the district’s special education program. Those new classes will allow special needs students–who used to be sent out to special center programs in other communities to meet their needs–to remain in district. The financial upshot of this move means the district will be able save costs on transporting students and will be able to capture $8,332 in per-student funding.
• Utility costs will be reduced by $100,000. Necessary improvements to facilities—such as window replacements and heating and cooling repairs—that will occur during the summer are being made with an eye toward efficiency, allowing the district to save money.
• Interest payments on loans will be reduced by $100,000.
• Unemployment insurance payments will go down by $300,000, and buyout costs will go down by $170,000. Cipriano said staff cuts this year are not as big as last year, and that payments into the state unemployment system will be considerably less than last year. And, he believes several teachers will be called back before the school year begins, negating the need for additional payments.

District Employees

• The district voted to pink slip 48 teachers and two additional employees Monday night to curtail a $7 million shortfall in at-risk, bilingual education and hold harmless funds that exist outside the $3 million general fund deficit.
• Wage and benefit cuts were negotiated with nearly all union staff members, saving about $1.9 million. The 1,200 members of the Detroit Federation of Teachers accepted a 6 to 7 percent pay decrease, and agreed to enter into a union-run health care plan that will fix the district’s health care expenditures. The district will pay $997 per union member, per month toward health care for the next four years, avoiding expected future cost increases.
• Nonunion wage concessions will further save an additional $200,000; administrative office employees are accepting an 8.1 percent wage decrease, and benefit reductions. Administrative costs will be reduced by $200,000 and secretarial services will be reduced by $200,000, because of attrition and replacement of employees, who will earn less than their predecessors.
• Contracted services will be reduced by $80,000, because a mentor for a first-time principal at will no longer be needed.