1. Romeo Community Schools 2009-2010 Budget Planning Discussion January 26, 2009

2. Presentation Overview Proposed Budget Timeline Enrollment Trends & State Funding Fiscal Facts Promise to Our Community Potential Spending Reductions Questions and Discussion

3. Budgeting Process Proposed Timeline for 2009-10 January – Present Budget Considerations Feb/March - Consider Input/Changes March - Decision on Reductions May/June - Budget Presented to Board June - Budget Truth in Taxation Hearing June - Board Approval

4. Enrollment Trends & State Funding

7. State Historical Blended Pupil Memberships Est.

8. January Revenue Consensus State 2007-08 School Aid Budget ended with a $247.1 million budget surplus State 2008-09 School Aid Budget estimates a year end deficit of $38.3 million 2008-09 shortfall $24 per-pupil (no proration) State has lower pupil counts Basic per-pupil funding is frozen 2009-10 Could have a $131 to $155 per-pupil shortfall

9. State Aid Blended Count* YearBlended CountDifference 2008-09 actual 2008-09 est. 5661 5711 (90) (40) 2007-08575117 2006-07573445 2005-065689136 2004-05555340 2003-045513107 2002-035406- *Combination of 75% of September count and 25% of previous February count.

10. Middle Cities Enrollment Projections 2009-10 Method #1 – 19 student decrease –Used the survival ratios for the past five years to arrive at a mean value. Most accurate for school districts that have not experienced major enrollment impacts.

11. Middle Cities Enrollment Projections 2009-10 Method #2 – 87 student decrease –Used the survival ratio for current year only. Most accurate for school districts that have recently experienced a significant change in enrollment trends.

12. Middle Cities Enrollment Projections 2009-10 Method #3 – 52 student decrease –Used the average ratio calculated by Method #1 and combines it with the one year ratio calculated by Method #2. Most accurate for school districts that have had fluctuations in their enrollment due to temporary occurrences.

14. Fiscal Facts

16. Fund Equity YearRevenueExpendituresSurplus (Deficit) Ending Fund Balance % of Expenditures Projected 2008-09 4949252750153590(661063)32498636.48% 2007-08497946324887196092267239109268.00% 2006-07490189534876257725637629882546.13% 2005-06467242714640263832163327318785.89% 2004-054451913644829675(310539)24102455.38% 2003-044314135944470903(1329544)27207846.12% 2002-034257554442571065447940503289.51%

17. Fund Equity Percent of total budget 9.3% 6.1% 5.3% 5.7% 6.1% 8.0% 6.48% Foundation Allowance 7280 7206 7280 7455 7665 7749 7846 Proration 74

18. % of Staffing Reductions 2003 - 2009 Percentage Administrative/Supervisor13% Teachers (REA)7% Clerical (ROSPA)12% Teacher Aides (RASPA)24% Cust./Transp./Food Serv. (AFSCME)16%

19. Summary of Reduction Dollars YearDollars 2008-09$1,011,690.00 2007-08$1,541,000.00 2006-07$446,000.00 2005-06$2,578,608.00 2004-05$734,098.00 2003-04$994,537.00 Total$7,305,933.00

20. Financial Dilemma 2009 – 2010 Fiscal Year Expenses are expected to exceed revenue for the 7 th year in a row.

21. Enrollment Resident enrollment is shrinking –Limited funding increases Schools of choice enrollment –Limited seats at all levels Statewide enrollment shrinking –Tax payers/dollars limited –Student foundation limited

22. Revenue Local property tax dollars go to Lansing Funding received back to district thru student foundation allowance Grant funding-shrinking/eliminated No way to raise local operating funds State foundation allowance – no significant revenue seems forthcoming

23. District Expenses District expenses continue to rise: –Materials and supplies –Utilities –Operational costs –Increased benefit costs –Employee contract step increases –Employee contract settlements

24. Promise to Our Community Maintain reasonable class sizes Keep reductions as far away from the classroom as possible Solutions need to be long term Maintain safe school environment Maintain programs and services when possible

25. Assumptions 2009-10 Worst Case Foundation allowance: remains unchanged Student count: decrease of 87 students Health benefit cost: increase of 12% Retirement rate: increase of 0.6% (17.14%) All other costs: increase of 0.5%

26. 2009-10 Estimated Budget (Before Any Reductions-Worst Case) Revenue$ 49,026,718.00 Expenditures$ 51,891,292.00 Deficit$ (2,864,574.00) Remaining Fund Balance$ 385,288.00

27. Assumptions 2009-10 Best Case Foundation allowance: remains unchanged Student count: decrease of 19 students Health benefit cost: increase of 6% (potential negotiated savings) Retirement rate: increase of 0.4% (16.94%) All other costs: increase of 0.5%

28. 2009-10 Estimated Budget (Before Any Reductions-Best Case) Revenue$ 49,386,765.00 Expenditures$ 51,376,218.00 Deficit$ (1,989,453.00) Remaining Fund Balance$ 1,260,409.00

29. Planning Factors State funding uncertainties Furniture and equipment needs Instructional materials and textbooks How much money should be allocated for technology? How much money should be allocated for vehicle/bus replacement? Continual need to upgrade and maintain facilities Contract negotiations

30. 2008-09 Budget Allocations Textbooks - $258,600 Technology - $162,000 Buses - $210,000

31. Reductions needed in the 2009-2010 budget In the range of $1,989,453 up to approximately $2,864,574 depending on enrollment, retirement, insurance, and other factors If there was a proration next year of $131 then that would add another $730,325 to the needed reductions

32. Possible Changes/Reductions Charge for in room appliances $7,000 Decrease number of lights in hallways and classrooms $5,000 Set points for heating and cooling $5,000 Outsource Noon Duty & Crossing Guards $11,191 Reduction equivalent to 1 support position in Central Office $76,981 Close Administration Building $23,600

33. Possible Changes/Reductions Transfer cost of ½ support position at high school to Food Service Budget $20,140 Reduce a ½ secretarial position at each middle school $58,883 Cut midday kindergarten runs $179,338 Transportation stop consolidation and re-routing $130,000 Athletic teams $28,000 Schedule B $12,000

34. Possible Changes/Reductions Criteria for consideration when closing an elementary building –Disruption to students –Disruption to parents –Re-districting and demographics –Affect on all programs (Pre K – 5) –Delivery of curriculum –Capacity of building –Maximum cost savings –Condition of physical plant –Operational and Transportation costs –Contract language Total savings $846,156

35. Possible Changes/Reductions Eliminate Young 5’s program $57,266 RHS eliminate extra hours (master schedule) $40,000 Media Specialist Middle Schools share one $70,000 Eliminate Serve Coordinator $19,300 Eliminate HS Hall Monitor personnel added in 2008-09 school year $10,000

36. Possible Changes/Reductions Contract considerations –Freeze Salary Steps for all employees $759,000 –Possible contract concessions $125,000 –Possible modified calendar/four day week during winter months $84,396 –Close down for 2 weeks in July $21,000

37. Total Reduction Plan Projections Total amount of savings $2,589,251 Total needed $2,864,574 Deficit $ 275,323

38. Why Have Fund Balance? To provide program stability Uncertainty about state funding State sometimes reduces state aid after school budgets are adopted To minimize borrowing needs –2008-09 borrowed $1,500,000 for 1 month interest cost $4,937.42 To provide a “rainy day” fund for one-time expenses Credit rating agencies consider district’s fund balance

39. Questions and Discussion