Why Long Term school Board Budget Projections Are Always Doom and Gloom: Part 1 April 17th 2012.

At the April 17th Schooll Board Meeting, Assistant Superintendent for Business Tina Kostiuk   provided some insight into why long term school budget projections are always doom and gloom.

This year in 2011-12 she said expenses topped revenues by $295,000. Leaving a projected June 30^th General   Fund Balance of $23,682,477. In 2008-09 the projected General Fund Balance for 2012 was $14.6 million. In 2009-10 that number dropped to 12.6 million and in 2010-2011 it bounced back to $19.6 or roughly four million below this  year’s current projection.

What is going here?  Kostiuk said pupils are revenue. Faculty and staff are costs. Of the two the latter is more stable and easy to predict.

From 2008-09 to the current year less funding per student  and 125 less pupils meant a drop of revenue of $4,653,515. Low interest rates also hurt income by as much as $300,000 dollars.

Staff Costs during this period included a drop of salaries and wages of $3.6 million, an increase of retirement benefits of $2,500,000 and a decrease of fringe benefit costs of $400,000.

 Federal stimulus and Edujobs money added approximately $7 million to General Fund.  If that had not happened the current General Fund Balance would be approximately $16 or close to 2008-09 projection for year 2011-12 of $14 million.  In short the Stimulus monies funded the General Fund during these years.

The projected General Fund Balance for 2012-1213, worst case scenario is a loss of $7.5 million leaving a balance of 16 million. A better case would mean a 4.5 million dollar loss and a fund balance of $19 million.

Projecting ahead to 2016 the worst case projects a deficit of $22.6 million for the general fund and a better case scenario which predicts a balance of $6 million dollars. Both examples are based on decreasing revenues and increasing costs.

Factors that are not as yet factored in include state budget decisions, the districts own budget balancing plans, the outcome of the May 8^th Bond Proposal, retiree pension and health care reform, and the outcome of pending litigation and  negotiations.

Other Developments of Note

 In other developments Brian Goby, The School District’s Director of Facilities requested   a contingency amount of $465,634, General Condition’s money of $239,690.32 and a Labor Budget of$35,000 from the Sinking Fund for district wide renovations through the summer months.

 These monies are expected to remain in the estimate provided to the Board last November.

 As a rule a bid is awarded to the lowest complete qualified bidder.

The key word there is complete.  Goby said that is not uncommon to receive as the result of an oversight or an attempt  to find  out what others are bidding, incomplete bids. One example of the lowest complete qualified bid, Goby disclosed, came from Hartwick Electric which is owned by Bloomfield Hills District Employee Dennis Hartwick.