Public Schools of Petoskey Budget Update and Outlook February 2009

Why are we here? As you know, we come out annually to discuss the finances of the District: –October February 2005 –February May 2006 –September May 2008 We want you to be aware of the District’s financial position. We want your input and help.

Every Year its Gloom and Doom, yet everything seems to turn out ok. What’s up with that? A budget is the financial roadmap for the District. If you don’t like the destination, you make changes so you end up where you want to be on that map.

Last Time We Met…. May 2008 – District was looking at the State Budget proposals, with the Senate and the Governor quite far apart on how much they would send to K-12 Schools Many Unknown Variables: –State Aid: Gov. was recommending $7,420; We are getting $7,316 –Enrollment: We were predicting a reduction of 25 FTE; actual was a reduction of FTE –Health Care cost increases: Predicting 10% increase; actual increase is 8.75% Budget was unbalanced by $504,055; current revision shows the unbalance will be $215,939.

Recent State Revenue Consensus Conference Meeting happened on January 9, 2009 to look at the current year revenue coming in to the state, and to explore projections for the upcoming fiscal year ( ). Representatives from industry, House and Senate Fiscal Agencies, and Treasury meet and discuss their economic outlook for the State. The next meeting happens in May, and it could change the State’s, and our, budgets for both this and next year, depending on what happens to the economy.

State Revenue Consensus Conference – State General Fund Budget for The State’s budget from closed out with $457.9 millions surplus. This carries forward to this year. Current year ( ) revenue estimates were revised downward, with the State’s General Fund projected to be short $144.6 million. This includes the cuts already made by the Governor earlier this year. Will likely result in more State budget cuts yet this year to various departments.

State Revenue Consensus Conference – State General Fund Budget for The outlook for the shows an imbalance of $1.3 billion between estimated revenue and appropriations. Estimate includes predictions of continued decline in auto sales and Big Three market share. Estimate does not calculate the impact of any of the Big Three declaring bankruptcy. Estimate does not calculate the impact of any Federal Stimulus Aid package.

State Revenue Consensus Conference – State School Aid Fund Budget for The State’s budget from closed out with $247.1 millions surplus. This carries forward to this year. Current year ( ) revenue estimates were revised downward by $338.7 million, offset by savings from declines in student enrollment across the State. Net result is the School Aid Fund is likely short $38.2 million, or approximately $24 per student. Consensus was despite the shortfall, there would likely be no cuts this year.

State Revenue Consensus Conference – State School Aid Fund Budget for The outlook for the shows an imbalance between $208.3 and $246.6 million between estimated revenue and appropriations. Estimate assumes foundation allowance remains unchanged at $7,316 per pupil for Petoskey. Assuming no additional revenue is found, this equates to a reduction in the foundation allowance of $131 to $155 per pupil.

Summary of Revenue Consensus Conference The three state fiscal agencies and the private sector analysts project a continuation of very difficult economic times for Michigan through and somewhat beyond. The projections call for continued serious decline economic decline through mid-2009, with a slowing beginning at that time will bring an accelerations of the recovery throughout the year. Considerable economic growth will occur in 2011.

Public Schools of Petoskey Financial Results – 2000 through 2009

Enrollment Data 1999 thru 2012

General Fund Revenue Property Taxes State Sources Local Sources Federal Sources ISDTransfers In

General Fund Expenditures

Responses for the Current Year Current year budget was short approximately $500,000. In response we did the following: –cut spending on supplies and purchased services –eliminated 2.5 FTE’s of positions –sub-contracted 2.0 FTE’s of positions –added SFX art, so we could count those students –will monitor events with Revenue Sharing Board and Voc Ed House to determine what further actions are needed. We are preparing our long-range forecast, and will be sharing that, along with this budget, with the staff in the next several weeks. We continue to ask for your ideas for revenue enhancements and expense cutting as we build next year’s budget.

Looking Forward Continued State economic struggles will keep school funding increases low. Annual cost increases at or above State school funding increases. Result – Annual trimming of the budget. Federal Stimulus package. Revenue sharing board.

How To Offset Our Challenges In the short term, maintain high MEAP scores = more students under Schools of Choice. Long-Range, make ourselves the Lighthouse District of the area. Do what you can to support your District Stay Positive, with yourself and with your co-workers, neighbors, and friends.