Archive: News

Last December Interim School District Business Administrator David Klemm warned the Board Of Education (BOE) that the district could expect to overspend the 2007-2008 budget by as much as $300,000.  At Tuesday's BOE meeting Klemm was back with slightly better news.  With new information he has revised his estimate to a $262,000 shortfall.  With contractual obligations that automatically increase the budget every year, Klemm said he would have to add to this year's budget when building the budget for next year.

"I've got to build next year's budget starting at that number right there," Klemm said.  "I've got to!  I have no choice, because if those are my expenditures this year -- they're not going to go down.  That means I've got to make up $262,000 before I begin."

Klemm told board members that he has already told building principals and administrators to expect a 0% increase in their budgets next year.  He also noted that the $262,000 estimate is a 'worst case scenario.'  Interim Superintendent Tom Helmer met with the faculty in December to put spending freezes in place, and instituted a review of spending on a case by case basis.  And new Superintendent Steve Grimm told the board that he has taken the hiring of a Director of Instruction off the table for now.  "That's a significant savings of the salary of a central office administrator," he said.  "It has an effect for this entire current year."

The district is suffering from a number of disasters that have other impacts besides financial.  Last May six out of seven buildings were rated unsatisfactory after a state inspection.  Most of the problems with the buildings had been identified and were slated to be addressed in a $20 million capital improvement project, but the district failed to make its case to the taxpayers, who voted it down.  Rising taxes and an increasingly vocal cadre of disgruntled taxpayers has created an atmosphere of distrust.  Years of taxing and spending that have depleted the district's reserves without replenishing them has left the district in dire financial straits.

Last October Auditor Jerry Mickelson told the board, "Fund balances are alarming low, and district spending was $21,000 over budget last year, with the school lunch program also showing a deficit of $9,000.  "The decrease in fund balances is attributable to the excess of expenditures of $1,231,000 this past year," Mickelson  said.  "This is after the appropriation of some $506,000 from the debt service fund as a revenue source to the general fund, as well as a utilization of $200,000 of reserve funds as a revenue source.  In addition the budget was overspent some $21,000."




Mickelson said the $21,000 overage isn't significant in terms of a multi-million dollar budget, but noted that it is a reflection of poor financial accountability practices.  And while some might also say that $262,000 is still a drop in the bucket of a $22,356,495 budget, it is 1247.6% of last year's overspending. 

If everything remains the same, the budget will automatically have to rise by 1.7% because of contractual obligations.  Klemm says one labor agreement requires a 3.5% increase next year.  Another specifies 3.6%.  The Lansing Faculty Association, the teachers union, will be negotiating for a new contract this year, making their increase a question mark at this point.  Health insurance costs are going to rise an estimated 5% to 6% next year, which could amount to an additional $190,000.  Worker's Compensation is slated to increase between 15% and 18%, adding about $16,000 to the budget.

Klemm promised to present a 'rollover budget' on the February 4th BOE meeting, and a first draft of the actual budget in the meeting following that.  He asked the board for direction on how they want him to proceed in formulating the budget for next year.  "Let's not talk about the tax levy," he said.  "Let's not talk about the tax rate.  Let's talk about the increase in appropriations.  Is a 6% increase OK?  Is a 7%?  is a 5?  Is a 4?  That's something the board is going to have to give me, Dr. Grimm, and the staff we are working with -- a direction so we can start on our first draft."

Last time around that was problematic.  Then Superintendent Mark Lewis and Business Administrator Larry Lawrence were given direction by the BOE to keep the budget below a 7% increase.  But they didn't like what the administrators proposed in cuts to make that goal.  With big money items like job positions off the table, Lewis and Lawrence nibbled around the edges of the proposed appropriations at least three times.  Each time board members were loath to cut specific items they proposed.  The result was a budget that came in at 3.84% of the previous years.  But because of a $400,000 mistake estimating state aid revenues, actual taxes went up close to 10%. 


Klemm urged the board to begin to plan for the future, rather than wallowing in the current budget woes.  "Remember, where we go in next year's budget is going to have an impact on the year after, and the year after, and the year after," Klemm said.  "The numbers (of this year's budget) are what they are.  But how are they going to impact future budgets?  That is the major concern that we have to deal with."

Board member David Dittman noted that rethinking the fundamental budget assumptions, including staffing needs would be a better approach than starting with a rollover budget that is based on current practices.  "Just rolling it over doesn't seem to make sense," he said.  "It seemes to me that we ought to go back and start to ask some basic questions about how we build the budget, and what kind of assumptions we want to make on staffing and other things.  Because if we just roll this budget over we're going to see a major tax increase."

"The rollover budget shows what would happen if we just continue to do what we are doing," explained Superintendent Steve Grimm.  "It's almost a trigger point to say here's what it would be," Grimm explained.  "The brutal fact is that this is going to be impossible.  From that we go back and reconstruct each of those areas.  We use staffing formulas, working with the leadership team to determine specific class sizes and the offerings we have in terms of program.  That's really to show that in essence it's an impossibility.  Just rolling it over and continuing business as usual is not going to be appropriate."

Grimm said that the district has to make a plan for the long haul.  "Where are we going to rebuild?" Grimm asked.  "It's not all going to happen in the one year.  We have to look may years out to where we eventually want to be.  We need to survive this year, and then move into next year as the beginning of the long term plan for success."

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