Fenton district faces $800,000 budget deficit Water rate increase will affect schools to tune of $90,000 per year
13.04.2005, 23:55
That's the news delivered Monday night by Fenton Superintendent Patrick O'Donnell, who blamed a looming $800,000 budget deficit on rising costs and static revenues. O'Donnell pointed out that the district has suffered reductions in state funding for each of the past two fiscal years, while costs for a variety of items continue to rise.
"We've been able to survive the cuts the past two years without making any major reductions, but we've seen some things change over the last few weeks that make it more likely that we'll have to make some major cuts," O'Donnell told the board. "One of the changes that we'll be affected by is water our water bill. It's going to affect us to the tune of about $90,000 per school year."
O'Donnell said the city of Fenton's decision to increase water rates by 95 percent last week was one of the events that has recently crimped the district's budget plans. He added that rising costs for bus fuel and natural gas are also negatively impacting the 2005-2006 budget projections.
Bus fuel is expected to cost an additional $60,000 next school year and heating costs are anticipated to rise by $248,000, according to O'Donnell. Increases in salaries, health insurance and retirement cost will add another $1,161,500 in new costs, he added.
While O'Donnell said the district is confident that it will receive an additional $175 per student in state aid next year, he explained that the cost increases outstrip $640,000 revenue bump by a projected $800,000.
Pete Hajec, the district's business manager, said the administrative staff has already identified $524,000 in potential cuts related to personnel, supplies and other line items. He said administrators will have to find another $300,000 in cuts unless the board approves spending from the district's fund balance.
Hajec and O'Donnell both declined to speculate how many jobs may need to be eliminated, saying that it won't be clear until the administration knows how many employees will retire this year and how much of the fund balance the board is willing to spend.
Budget projections for next year are based on a conservative student enrollment increase of 20 pupils, according to Hajec, who noted that the district is expected to receive $6,875 in state aid per student during the next school year.
Currently, the district is expecting to have $2.9 million in its fund balance at the end of the 2004-2005 school year, which represents about 10 percent of annual revenues, Hajec said. He added that the fund balance could go as low at $1.3 million, or just 5 percent of annual revenues at the end of the next school year, depending on how much the board decides to spend from the balance.
O'Donnell said that Proposal A, which passed in 1994 and limits annual property tax increases to 5 percent or the rate of inflation, has failed to provide sufficient school funding during the soft economy of the past few years.
"Structurally, something just needs to be done differently with the funding mechanism," he stressed. "Here we are, 10 years later, and we're left to deal with the impact."
While the board took no official action on the budget issue, several board members expressed differing opinions on a course of action.
Julie Steffey and Lynn Hopper urged the board to wait until more details were available on potential cuts and the number of district retirees was clearer. Ann Ingles, the board chair, and Nora Kryza advocated splitting the deficit between budget cuts and additional fund balance spending.
Ken Elston took the most decisive stance, saying he opposes any additional spending from the fund balance unless district employees agreed to offset some of the estimated $463,000 increase in the district's health insurance premiums next school year.