1. Birmingham Public Schools Board Study Session October 6, 2009

2. Review of 5 Year History

3. 2004-052005-062006-072007-082008-09 Foundation Allowance11,75511,93012,14012,18812,244 Change741752104856 % Change0.63%1.49%1.76%0.40%0.46% CPI Adjusted11,75512,20212,49912,87112,682

4. 2004-052005-062006-072007-082008-09 Enrollment7,9768,0358,0798,0228,017 Change1105944-57-5 % Change1.40%0.74%0.55%-0.71%-0.06%

5. 2004-052005-062006-072007-082008-09 Revenues (State Formula)$95,636,906$97,906,925$98,079,060$97,772,136$98,160,148 Other Revenues$6,439,905$7,514,640$9,393,656$10,648,854$7,704,538 Total Revenues$102,076,811$105,421,565$107,472,716$108,420,990$105,864,686 Transfers($3,015,801)($3,035,108)($2,190,448)($1,686,043)($3,084,413) Net Revenues$99,061,010$102,386,457$105,282,268$106,734,947$102,780,273 Net Revenue % Change1.95%3.36%2.83%1.38%-3.71%

6. 2004-052005-062006-072007-082008-09 Salaries62,462,61262,185,09465,078,04361,785,53255,876,277 FICA & Retirement13,949,15114,826,79216,523,31515,057,13413,516,471 Employee Insurance12,469,35813,082,40812,573,23113,488,95412,490,975 Capital Outlay770,652580,137239,05669,9252,333,789 Utilities3,162,8014,020,4314,321,7084,837,563 Salaries4,121,192 Other Costs6,410,3796,803,9516,615,5078,036,52013,967,924 Total Expenditures99,224,953101,498,813105,350,860103,275,628102,306,628 Adjusted for CPI99,224,953102,995,501105,498,292115,837,124114,134,318 %Change1.44%2.29%3.80%-1.97%-0.94%

7. 2004-052005-062006-072007-082008-09 Total Expenditures99,224,963101,498,813105,350,860103,275,628102,306,628 % Change1.44%2.29%3.80%-1.97%-0.94% Total Revenues99,061,010102,386,457105,282,268106,734,947102,780,273 % Change1.95%3.36%2.83%1.38%-3.71% Excess/Deficit(163,953)887,644(68,592)3,459,319473,645

8. BUDGET DEVELOPMENT PLANS Expense Reductions TotalInstructionalSupport 2002-03 $ 721,550 $ 276,500 $ 445,050 2003-04 $ 3,854,786 $ 2,078,750 $ 1,776,036 2004-05 $ 3,381,390 $ 2,551,500 $ 829,890 2005-06 $ 2,939,572 $ 2,189,462 $ 750,110 2006-07 $ 2,659,950 $ 1,760,000 $ 899,950 2007-08 $ 2,317,494 $ 1,503,250 $ 814,244 2008-09 $ 3,869,582 $ 237,872 $ 3,631,710 2009-10 $ 3,063,675 $ 1,702,044 $ 1,361,631 Total $ 22,807,999 $ 12,299,378 $ 10,508,621 2009-10 Budget$ 105,147,340$ 81,960,416$ 23,186,924 % Cut22%15%45%

9. 2009-2010 State School Funding Update : 1.October 1, 2009, Governor signed 30-day continuation budget. October 20, 2009 State Aid payment may result in a “negative adjustment” of $160,323. Annualized “negative adjustment” is approximately $1.7 million. 2.Foundation Allowance Sensitivity Data: $50/per pupil = $392,000 $100/per pupil = $784,000 3.Enrollment Sensitivity Data: 1 FTE = $9,100 10 FTE = $91,000 BIRMINGHAM PUBLIC SCHOOLS BOARD STUDY SESSION OCTOBER 6, 2009

10. BIRMINGHAM PUBLIC SCHOOLS BOARD STUDY SESSION OCTOBER 6, 2009 State School Funding Update:2010-20112011-2012 If….Assumptions: 1)No State Aid Act 2)No ARRA of 2009 - Education Stabilization grant 3)Taxable Values remain the same 4)Enrollment Projections remain the same Then…Current Case Scenario: 1)Per pupil shortfall could be approximately $600 per FTE$ (4,800,000) 2)State allocated 20(j) dollars could be eliminated $ (954,000) 3) Birmingham Public Schools structural deficit (Range $3 - $4 M annually) $ (3,000,000) Current Case Scenario total budget shortfall $ (8,754,000)

11. Not just a Birmingham Public Schools Issue... Deficit Districts Oakland Schools Other “Borrowing” Districts

12. BIRMINGHAM PUBLIC SCHOOLS BOARD STUDY SESSION OCTOBER 6, 2009 Preliminary Budget Development Timelines: DateActivity August 2009Begin Budget Development Process September 2009Review prior fiscal year results (June 30, 2009) Develop preliminary budget development target (forecast) October 2009Review preliminary financial forecast Recommend preliminary budget reductions/revenue enhancements October 27, 2009Community Conversations November 5, 2009

13. BIRMINGHAM PUBLIC SCHOOLS BOARD STUDY SESSION OCTOBER 6, 2009 DateActivity November 2009 -Collect financial data, staffing, finalize enrollment forecasts, etc. December 2009Continue to compile restructuring/repurposing information Amend current fiscal year results (June 30, 2010) January 2010 Present final forecast; budget development targets Review preliminary budget reductions/revenue enhancements January 2010 – March 2010 Prepare preliminary budget, review forecast assumptions Continue to gather feedback, restructure and repurpose budgets TBDCommunity Conversations TBD

14. BIRMINGHAM PUBLIC SCHOOLS BOARD STUDY SESSION OCTOBER 6, 2009 DateActivity March 2010Review budget progress Release staff allocations based on enrollment, restructuring/repurposing March 2010 -Disseminate preliminary budget and impact information to May 2010the staff and community Receive feedback and modify where appropriate May 2010Update taxable value information Finalize budget development process and review preliminary budgets June 2010Public Hearings on 2010-2011 budgets and millages Adopt 2010-2011 budgets and millages

15. Work Areas to Review….

16. Fund Equity Board Policy 6215: 1.Maintain Cash Flow Stabilization Fund to operate District without borrowing 2.District limit use of Fund Equity to smaller of: 3% Anticipated Expenditures or 20% Unrestricted Fund Equity 3.At June 30, 2009, approximately $3,045,000

17. Sale of Facilities Reviewed 4 Currently Non-Instructional Use Facilities: Meadow Lake Elementary Midvale Elementary Administration Building Lincoln Street Property Currently, 2 of the 4 available for sale are under request for proposal: Administration Building Lincoln Street Property

18. Sale of Facilities Issues: 1.Distribution Costs for Fuel Storage Tank 2.Relocation Costs for Administration Staff and/or Lincoln Street Alternative 3.Highest and Best Use – Zoning, Price, Viability of Buyer

19. Capital Projects Needs Required by law, code or licensing$530,000 Required by safety or liability prevention $458,000 Short-term annual repair of assets$442,000 Long-term annual replacement $2,792,000 Issue: Only current funding source is General Fund

20. Technology Investment Total Technology Investment to Date: $42,000,000 Necessary Technology Replacements: 2010-2011 $2,690,000 2011-2012 $1,970,000 2012-2013 $4,515,000 2013-2014 $6,765,000 $15,940,000 Issues: Only current funding source is the Capital Equipment Fund Proceeds from sale of facilities?

21. Energy Management Board Policy 8910: 1.Purchase energy effectively 2.Use Energy Efficiently A.General regulations for building operations B.Guidelines for operating lighting equipment C.Regulations for heating, ventilating, and air conditioning (HVAC) systems D.Unoccupied hours-school vacation days, weekends and holidays E.Windows and doors F.Classroom and building personal equipment 3.At June 30, 2009, savings in energy procurement was approximately $205,000

22. Administrative Staffing 1.Continue to evaluate Administrative staffing, at all levels, using like-district benchmarking when appropriate 2.Review equitability of staff between departments and among buildings 3.Review all levels, top to bottom, Instructional and Non-instructional staffing

23. Line-Item Budgets Supplies Textbooks Professional Development Costs Non-Athletic Teams and Activities Costs Repairs Capital Outlay

24. Efficiencies in Cost Sharing 1.Privatization of Transportation Services with Durham School Services 2.Privatization of Custodial Services - GCA Service Group 3.Other opportunities in contracting: A.Lawn mowing and leaf blowing B.Environmental services C.Rubbish removal D.Substitute teaching staff E.Non-staff athletic coaches

25. Transportation Services 2007-08 Actual Expenses 2008-09 Actual Expenses Total Cost of Transportation Services $ 3,457,729 $ 3,328,262 Special Education Bus Aides $ (79,969)(2) $ (184,848)(5) Clawson Bus Repairs $ 95,880 $ - Adjusted Total Cost $ 3,473,640 $ 3,143,414 Difference between 2007-08 and 2008-09 expenses $ 330,226 Plus savings in Worker's Compensation Costs $ 202,837 Net Savings $ 533,063* * Does not reflect one-time additional unemployment expense: $160,051 Note 1: Savings does not reflect purchase of school buses. On average, eight buses were purchased annually at an estimated cost of $600,000 Note 2: Budgeted potential savings: $507,700 - $650,000

26. Custodial Services 2007-08 Actual Expenses 2008-09 Actual Expenses Total Cost of Custodial Services $ 5,692,868 $ 3,246,792 Difference between 2007-08 and 2008-09 expenses $ 2,446,076 Plus savings in Worker's Compensation Costs $ 155,110 Net Savings $ 2,601,186* * Does not reflect one-time additional unemployment expense: $114,860 Note 1: Savings does not reflect lower cost of departmental overtime (i.e. Principal, Athletics, Community Ed.). This is estimated at $500,000 Note 2: Budgeted potential savings: $2,293,010 - $2,713,610

27. Collaboration and Program Partnering 1.Purchasing - Use of Cooperative Purchasing through Oakland Schools, and the State of Michigan (example: REMC bid for hardware and software purchasing) 2.Technology – Internet connectivity, Follett Library Automation, Web filtering 3.Business Services - Third-Party Administration of District’s 403 (b) Plan 4.All programs under review….

28. Generating Additional Revenue For the Year Ended 6/30/09 1) Rental of Facilities YTD (gross) $ 921,142 2) Birmingham Conference Center (net) $ 135,000 3) Tuition Enrollment Program (gross) $ 187,177 4) Community Education Recreational Programs (gross) $ 729,285 5) Partnerships with PTA's, CSO's, BEF and grants (Building sign projects, Promethean Boards, equipment, etc.) 6) Other

29. Labor Costs 1.Service industry, therefore majority of costs are personnel related. 2.Six collective bargaining groups, five agreements expiring June 30, 2010. 3.2009-2010 salary, FICA & retirement @ $71.9 M 4.2009-2010 insurance benefit cost @ $14.0 M 5.2009-2010 total staff costs @ $85.9 M (82% of total) 6.Recent changes to labor agreements include… A. Off-schedule salary B. Contributions to health insurance C. Other cost savings (sick banks)

30. Budget Development Guiding Principles 1._________________________________ 2._________________________________ 3._________________________________ 4._________________________________

31. Summary Points We have been good fiscal stewards. We are facing a $16 M problem over the next two years. Although the financial problems will cause us to restructure, we will continue to provide a first-class education.