Tuesday, March 3, 2015

Balancing the budget

This is the time of year that we begin the process of projecting our budget revenues/expenses for the next school year.

As a result of projected enrollment decline of about 60 resident students as well as a decline in expected revenue based on the first run of the Governor’s budget proposal, it is anticipated that we will need to reduce our expenditures by approximately $1 million in order to have a balanced budget for next school year and maintain at least a 10% fund balance as required by Board policy and auditor’s recommendation so as to not go into operating deficit.

The Governor’s preliminary budget indicates a $75 per pupil increase in funding.  However, what isn’t apparent is that this budget reduces funding in two areas that we received revenue this year totaling a reduction of $100 per student.

The first of these reductions is for Best Practices for which all schools that met the criteria received $50 per pupil this year, which Lake Orion did.  That allocation has been reduced by $30 and we will only receive $20 per pupil next year. The second reduction in the Governor’s budget eliminates dollars for student performance.  This current year Lake Orion received $70 per pupil for the performance of our students; this will be eliminated next year. The net result of the Governor’s budget for Lake Orion is a reduction of $25 per pupil over this current school year’s revenue.

There is, however, an allocation for at-risk students of $26 per at-risk student but this allocation is very controlled as to how the funds can be used and for whom it is earmarked – meaning this is not money that can be used for the general population of students.  Even if we were to count this, we would only be realizing a $1 increase in our funding for the next school year – not a $75 increase as is being “advertised.”

In order to have a balanced budget for the next school year and maintain at least a 10% fund balance as required by Board policy and auditor recommendations, the administration is working to identify reductions in our expenses.  Of course, it is important to note that this is all very preliminary and we hope that there will be favorable revisions to the Governor’s budget as it goes through the legislative process.