After a decade of teacher and staff concessions, slashed programs, layoffs, shuttered schools and consolidated services, Kent County school districts continue to struggle to balance budgets because of increasing costs.
While the economy has improved in the housing and job markets, a sunnier financial picture isn’t necessarily carrying over to schools, and districts continue to play a constant game of catch up to stay out of the red.
“If you look at the state foundation grant for the last 10 years, with inflation adjusted, we’re actually getting about $1,000 per pupil less in 2014 compared to 2004,” said Larry Oberst, Grand Rapids Public Schools chief financial officer.
Key factors straining budgets include rising retirement and health-care costs, and districts with declining enrollment are receiving less money from the state.
Administrators face the question, “How do you offer quality programs when you’re expenditures are rising faster than their revenues are?” said Mike Hagerty, Kent ISD assistant superintendent of Administrative Services. “If this trend continues, it’s going to get more and more difficult to do that.”
“I think we are in a period of a new normal where revenue is going to increase 1 percent or so (annually) and we are going to have to live within that,” Hagerty said.
Enrollment Can Amplify the Problem
While financial situations vary district to district and none have been left unscathed, a perfect storm of factors has led to ongoing budget woes in GRPS. After more than a decade of cuts, school consolidations, and closures, the Board of Education worked to close a deficit of $13.5 million in next school year’s budget. The district has decreased its budget from $222 million in 2004 to $195 million today, a time period when enrollment dropped from 22,600 to 16,500 students.
The State of Michigan bases funding on a per-pupil allotment from its School Aid Fund, so local Boards of Education must base budgets on their best estimate of how many students will enroll each year. For GRPS, declining enrollment accounts for about $2.7 million in decreased revenue for next year, based on a drop of 400 students.
The GRPS budget includes an increase of $2.8 million in retirement costs. Health insurance rates rose by nearly 10 percent with an increased cost of $600,000 to the district.
In June, the state legislature approved per-pupil funding increases of between $50 and $175, with lowest-funded districts receiving the most. The state is spending an additional $177 million to increase minimum funding allowances from $7,076 to $7,251 per student and an additional $268.8 million to cover teacher retirement costs.
Hagerty said even with the $268 million allocated for retirement, districts are still paying around 4 percent more for retirement costs.
“Districts still feel the pinch,” he said
GRPS’ budget trimmed $5.9 million in costs, and used $7.5 million of its reserves, known as a fund balance.
Administrators based the budget on $3.2 million in increased state funding, up $166 per pupil over fiscal year 2013-2014, meaning a new per pupil foundation allowance set at $7,251. In addition, GRPS is receiving an increase in its Performance Funding categorical grant, up from $30 to $70 per pupil. Also Grand Rapids is experiencing increased taxable values, with city property values up approximately 1.5 percent over prior year.
Still, GRPS is upping its investment into staff, an effort to retain, recruit and develop top education professionals. Last year’s budget included a $2.7 million investment in staff compensation. This year’s budget includes an additional $900,000.
Administration officials are working with Dean Transportation and were able to identify an additional $919,000 in decreased transportation costs.
GRPS cut $1 million by freezing administrative compensation, leaving unfilled vacancies, and eliminating positions.
Reduction to the athletics budget totaled $200,000, with discussions under way for fundraising and implementing a pay to play for athletics plan. Expense reductions were made to the central offices in the area of supplies and contracted services.
Most Districts Cutting
Countywide, few districts were able to balance the budget without considerably dipping into their fund balances, cutting staff or eliminating positions.
• Wyoming Public Schools faced a $3 million shortfall, based on a projected a loss of 160 students and rising expenditures. “There will be reductions in staff and changes in programming. We will not cut any programs, but the number of staff will be reduced according to class sizes,” said Superintendent Tom Reeder said.
• Godfrey Lee Public Schools, has an enrollment increase of 34 percent over the past five years, but “that hasn’t led to a cure for our budget ailments,” said Superintendent David Britten. The district’s budget deficit of about $500,000 to $1 million will be covered by reduced spending and drawing from the fund balance.
Britten said growing costs are a continuing problem despite the willingness of teachers’ unions to agree to cost-reductions in contracts.
“Coupled with declining state funding when adjusted for average inflation rates, we are continuously cutting programs and student support at a time that the Common Core and other state mandates are driving costs up,” he said.
Rising costs are occurring while there are more students with limited English proficiency and those living in poverty, he said.
• Godwin Heights Public Schools faces a budget situation similar to Godfrey Lee’s, said Superintendent William Fetterhoff. The district had to close a deficit between $500,000 and $1 million through reduced spending and by using fund equity.
• Northview Public Schools Superintendent Mike Paskeiwicz said the district is avoiding cuts, but is tapping into $700,000 of its fund balance to run existing programs next year and to address legislation that prevents using para-professionals in the elementary media center, a post that currently requires a certified teacher in that position.
• Byron Center Public Schools faced a $1 million budget deficit, despite enrollment growth expected at 20 students, to be covered by cost reductions, said Superintendent Dan Takens.
• Comstock Park Public Schools, where enrollment has declined, used $600,000 of its fund balance for 2013-1014 and will draw another $1.6 million from it next year. Superintendent Ethan Ebenstein said they also plan to eliminate one administrative position, four certified staff positions, and adjust support staff hours.
• Lowell Area Schools Superintendent Greg Pratt said the district is balancing the budget by dipping into $400,000 of its fund balance. Flat enrollment is projected.
• Rockford Public Schools reduced staff by nine positions through attrition to cover a $1.2 million budget gap. Administrators are expecting a 27-student decline in enrollment.
• Kelloggsville reduced its 2014-15 budget by $2 million through six teacher retirements, laying off 14 teachers, and adjusting supply expenditures. Enrollment is projected as being flat for next year.