The Dearborn Public Schools Board of Education now has a better idea of how its finances will look during the next three schools years after its chief financial manager gave them the fiscal lay of the land at the regular Monday night school board meeting.
Bob Cipriano, the director of business services for Dearborn Schools, said that if no cash-saving strategies are implemented, the district would face $24 million in deficits during the next three school years.
“Obviously, we’re going to do something about this,” said Cipriano before the meeting. “But, if nothing were done, this is what we would be looking at.”
The most pressing concerns for the district, at least fiscally, include stubbornly stagnant state dollars and the escalation of pension obligations, among other issues, Cipriano said.
The district’s financial analysis assumes a handful of assumptions; namely that Michigan school districts will not receive additional help from Lansing, and that there will not be a huge influx of students, which would bring with them additional per-pupil funding.
For the current school year, the district lists $230 million in resources, which include state and federal funds for specific, earmarked purposes, such as food services, physical improvements and adult education.
The district’s general fund for 2011-12 equals $169.5 million, but for 2012-13, that revenue is projected to fall to $165.6 million in 2013. The district’s per pupil allotment will likely stay at $8,332 per student, according to the district’s analysis.
At the same time, expenditures for 2013 are expected to increase to $171.6–about $6 million beyond revenue projections. In 2014, expenditures will outpace revenues by $8.8 million, equaling about $174.4 million, and in 2015, the district will face $174.9 million in expenditures; or $9.3 million more than the 2012 revenues.
Additionally, the district will exhaust federal Qualified School Construction Bonds, which provided the schools with additional monies to make major and minor improvements to school facilities. In Dearborn, the district , and more improvements will be made this summer, Cipriano said.
That means additional improvements will have to come from the general fund, which cannot support the cost of annual improvements, Cipriano said.
“We need to continue to invest in our buildings,” he said. “The QSCB funds were a one-time thing, and the remaining funds will be used this year.”
Increases in pension and health care costs–among other reasons–are contributing to increased expenditures for the schools.
In 2013, the district’s pension costs will increase by 2.9 percent. The following year, those costs will increase another 3 percent; and in 2015, by 1 percent.
Because there is a projected surplus in Michigan’s School Aid Fund, it is possible that local districts will get some relief, but there could be a catch.
“I think (the additional funds) would be tied to some behavior (required by the state),” he said.
This year, the state set up provisions where additional aid could be procured by schools if certain criteria were met, such as bidding out services or sharing services with other governmental units.
Board Secretary Hussein Berry questioned why the potential for increased enrollment–the district netted $4 million in additional funding for 2011-12 –was not factored into Cipriano’s analysis.
“That (enrollment increases] has been a trend,” he said. Cipriano said that increases cannot be factored into projections.
On the upside, the district was able to get health care and wage concessions from its largest unions. The schools will not be required to retain $2.7 million in reserve funds on hand for health care costs because its two major labor unions will .
Budget fixes are subject to approval of the school board, which will take on the 2012-13 budget during the next several months.