1

East Lansing Public Schools

BUDGET PLANNING and

DEVELOPMENT FISCAL YEAR 2007/08

May 21, 2007

2

Table of Contents

I. Budgetary ChallengesII. Budget AssumptionsIII. “Most Likely” Scenario IV. Proposed SolutionsV. Additional NotationsVI. Next Steps

3

I. Budgetary Challenges

1. State Budget/Revenue Outlook2. Foundation Allowance3. Student Enrollment4. MPSERS Contribution Rate5. Health Insurance 6. Fund Balance

4

I. Budgetary Challenges – State Budget/Revenue Outlook

1. Total State Budget $41.7B Two Major Funds: GF $9.2B, SAF $13.1B

2. January 2007 Consensus Revenue Estimating Conference

06/07 State revenues significantly below projections 06/07 GF shortfall estimated at $607 million 06/07 SAF shortfall estimated at $377 million SAF shortfall equates to $244 per pupil (ELPS $832,000)

3. SOS address Governor indicates she will not slash school funding mid-year (i.e. no pro-ration)

4. Governor and Legislators yet to reach a solution Pro-ration letter has been issued to Districts $122 per pupil pro-ration (approx. $416,000 to ELPS)

5

I. Budgetary Challenges – Foundation Allowance Per Pupil Increases

Foundation Allowance - Per Pupil Increase

300 300

157

(74)

-

175

210

-

(100)

-

100

200

300

400

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07IncreaseRemainsUncertain

2007-08Projected

6

I. Budgetary Challenges – Declining Enrollment (Blended FTE)

4,003

3,613 3,5973,693

3,6273,560

3,5143,465

3,410 3,410

3,000

3,250

3,500

3,750

4,000

1994-95 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08projected

Blended Enrollment History

7

I. Budgetary Challenges – MPSERS Contribution Rate

12.99%14.87%

16.34% 17.74% 18.56%16.72%

32.0%

0.00%

10.00%

20.00%

30.00%

2003-04 2004-05 2005-06 2006-07 2007-08 ? 2007-08 ? 2019-20 Proj

MPSERS Contribution Rate

8

I. Budgetary Challenges – Health Insurance Annual Premiums

14,803

6,318

2,103

5,750

3,710

13,143

4,374

11,961

7,717

4,927

13,472

8,692

1,000

3,500

6,000

8,500

11,000

13,500

1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Single 2 Person Full Family

9

I. Budgetary Challenges – IISD Districts Fund Balance % at June 30, 2006

Fund Balance as a Percentage of Total Expenditures

17.7%

13.0% 12.9% 12.9%

9.7% 9.8% 9.6%

6.8%

1.9%

12.6%

19.5%

8.4%

12.8%

0.0%

5.0%

10.0%

15.0%

20.0%

Wav

erly

Holt

Lesli

e

Mas

on

Stock

bridg

e

East L

ansin

g

East L

ansin

g 6-

30-0

7

Okemos

Haslet

t

Willi

amsto

n

Lans

ing

Dansv

ille

Web

berv

ille

10

II. Budget Assumptions

Major Revenue Assumptions:1. Foundation Allowance – no increase; est at 06/07 level of

$8,5172. Blended Enrollment – to remain constant at 3,4103. County Sp Ed – allocation to decrease 9%

Major Expenditure Assumptions:1. Employee Salaries - % increase from 1.75% to 1.50%; some

groups remain unsettled2. Moving Eligible Employees up on step and longevity3. MPSERS contribution rate – blended rate of 16.84% 4. Health Insurance Premiums – 9.9% increase 5. Utilities – no increase

11

III. “Most Likely” Scenario

Projected 07/08 Budget Deficit: Revenue decreases of $280,000

Expenditures: Salary and Benefit increases of $1,037,000 Supplies/PS/Capital Outlay increases of $87,000

06/07 Structural Deficit $801,000

Total Projected 07/08 Deficit of $2,205,000

12

IV. Proposed Solutions

1. Impact of Voluntary Severance Plan (VSP) and modified staffing

2. Reduction of 22.0 full time equivalent (fte) (teaching & administrative staff) due to retirements, resignations, leaves

3. Significant thought and input from administrative group results in replacing 13.9 fte

4. 8.1 fte reduced as follows:

3.0 fte @ Elementary Level (K-6)

.2 fte @ Middle School Level (7-8)

2.4 @ High School Level (9-12)

2.5 in Special Education (K-12)

13

IV. Proposed Solutions (cont.)

5. Also, a reduction of 3.9 fte from the paraprofessional staff is proposed

6. Reductions in fte = $921,500

7. Additional savings from VSP/retirements = $214,000

8. Total “Staffing Reductions” from 06-07 to 07-08 = $1,135,500

9. Additional proposals impacting deficit (“Additional Impact”):

Reduce HS security = $8,000 Reduce legal fees = $27,000 1 year delay on purchase of new busses = $130,000 “Culture of accountability” leads to spending at 99% level

= $320,000

14

IV. Proposed Solutions (cont.)

10. Total “Staffing Reductions” + “Additional Impact” = $1,620,500

11. “Pending Issues:”

Non-core subject area service to parochial schools Modifications to food service Modifications to Title I

12. Potential favorable impact of “Pending Issues:” $254,000

13. If “Staffing Reductions” + “Additional Impact,” then deficit is approximately $584,500 leading to an anticipated fund balance of 8.1 % in June, ‘08

15

IV. Proposed Solutions (cont.)

14. If “Staffing Reductions” + “Additional Impact” + “Pending Issues,” then deficit is approximately $330,500 leading to an anticipated fund balance of 9.0 % in June, ’08 .

15. A foundation allowance increase of $171 per student in 07-08 = $584,500

16. A foundation allowance increase of $97 per student in 07-08 = $330,500

16

V. Additional Notations

1. A 07-08 general fund adoption based on the proposed solutions yields, among other things:

No program reductions, with the possible exception of minor changes in HS and MS non-core subject course offerings

Supply budgets remain the same as 06-07

Modest increase in curriculum/textbook budget for 07-08

New computers would be ordered and installed in K-4 schools

There would no need to layoff any member of the teaching staff prior to 07-08 due to financial considerations

17

V. Additional Notations (cont.)

Up to 4 paraprofessionals could have reduced schedules or be notified that “there exists the possibility their services are not planned for in 07-08”

Could consider bus purchase and/or other issues in November, after enrollment and foundation allowance information is in hand.

2. Note: We are very concerned about the 08-09 fiscal year.

18

Additional Notations (cont.)

3. Strategic Planning initiatives will need to begin in the early fall. Financial goals are prepared as follows:

Identify and develop collaborative partnerships (City of EL, State of MI, MSU, IISD, LEA) to improve efficient use of funds.

Develop and implement a standardized internal financial form for program evaluation (cost analysis).

Research and implement programs (health care, food services, purchase cards) to control costs.

19

V. Additional Notations (cont.)

Gather RFPs of contracted services to ensure competitive quality and cost-effective standards are regularly evaluated.

Establish a culture where budget planning is considered a 12 month process (multi-year projections).

Explore zero based budgeting.

Communicate financial realities effectively to the East Lansing Community.

20

V. Additional Notations (cont.)

Consider funding opportunities such as sinking fund, bond issues, enhancement millages, technology bond.

Evaluate and enhance opportunities for grants, donations, contributions and fees.

Study prospects related to commercialization (advertising).

Study opportunities for community education, recreation, child care expansion and enrichment programs.

21

V. Additional Notations (cont.)

Undertake cost/benefit analysis of Schools of Choice program.

Monitor communication with key elected officials and civic groups.

Educate legislators regarding issues impacting public education.

22

VI. Next Steps

2007-08 Revised Budget Calendar1. May 21st BOE meeting – proposed budget

recommendations2. June 3rd Notice of Public Hearing (Truth in Taxation)3. June 11th BOE meeting – public hearing on

proposed 2007-08 budget4. June 25th BOE meeting – adopt 2007-08 proposed

budget By law BOE must adopt budget by June 30