BARAGA COUNTY - Both Baraga County school districts have been deficit spending for years, but strong fund balances have prevented any major cuts. Now those fund balances are getting dangerously low, and difficult decisions may be on the horizon as soon as two months from now when new fiscal year budgets are approved.
L'Anse Area Schools has about $250,000 in deficit spending for this year, which is projected to reduce the fund balance to just under $500,000. But, with the district projecting a decline in student enrollment and an increase in health care costs, next year's budget is looking bleak without drastic changes.
"The book deficit right now is over $250,000. For purposes of budgeting, you carry over that deficit. Right now the preliminary amount is over $600,000," LAS Superintendent Ray Pasquali said at Monday's regular school board meeting.
Stephen Anderson/Daily Mining Gazette
Baraga Area Schools Superintendent Jennifer Lynn discusses the district’s proposed 1-to-1 technology initiative during the regular board of education meeting Monday evening. Also pictured is board vice president Gale Eilola.
Using a three-year enrollment blend, the district anticipates a loss of 23.62 students, and with the projected $6,964 in per-pupil funding that goes with it, that would be a loss of $164,490. L'Anse Education Association contract obligations are projected to rise $151,587. Retirement costs are looking at an increase of a half percent.
"We're in the process of analyzing each and every department, every single facet of the operation, including support staff and professional. We'll have some recommendations in May or June," Pasquali said. "... Obviously the first thing we're going to be looking at is non-human, non-employee cuts. We start from there and work our way, but ... we're looking at the possibility here that there will be layoffs if we don't get some relief from the state."
Employment currently accounts for about 75-80 percent of district expenses.
Pasquali emphasized the situation is fluid regarding both the state and district budget and several things could change.
The district also plans to maintain its 1-to-1 technology initiative, which will continue to phase in putting an ASUS Transformer tablet in the hands of every student.
"One of the programs that's fairly safe right now is our 1-to-1 program, simply because it's being funded outside the general fund for this year," Pasquali said. "... The 1-on-1 program I think presents our best hope of saying that we are at the forefront of technology."
The Baraga Area Schools Board of Education also discussed its budget at length Monday night.
Its fund balance is in a little better shape at $983,696, but the district is also deeper in deficit spending this year at $340,332 - and that's even factoring in an improvement of $30,000 following an approved budget amendment resolution Monday.
The actual fund balance on July 1, 2012, the beginning of FY 2012, was $1,324,028.
"The fund balance is basically our savings account. We put money away for the rainy day. It hasn't stopped raining, kind of like it hasn't stopped snowing," BAS Superintendent Jennifer Lynn explained at the board meeting in response to a question from new board member Ralph Sackett. "... We'll have to make some difficult decisions with regard to programs."
Baraga also anticipates a drop in enrollment of about 15 students, meaning about $105,000 in lost revenue. All losses appear to be due to families moving out of the area, instead of moving for school of choice. Lynn said the moves were likely "primarily for economic reasons."
Lynn also reminded the Baraga board that the budget is very much in flux for next year, but dipping into the fund balance so significantly "is a pattern that cannot sustain itself."
"We're still within the range of being able to pay the bills without having to borrow, so our credit rating is good," Lynn said. "But if we don't make some changes now, we're not going to have a good credit rating."
Both detailed school budgets are on the district websites based on budget transparency requirements from the state.