1. 2013-14 Budget Update & Budget Reduction Recommendations

2. 2013-14 Budget Projection Update & State Budget Update Basis for recommendations & budget variables Budget Variables that could change projection EGR Now donations Enrollment Performance based funding Negotiations Review of budget focus groups recommendations Proposed budget plan for 2013-14 Structural balance Overview of proposed budget reductions Budget process till adoption of budget Discussion/Questions Topics of Discussion

3. 2013-14 Budget (Original Projection) 2013-14 Budget Revenues:$27,363,321 Expenses;$28,892,006 Net Chg. in Fund Balance($1,528,685) Key Assumptions: No increase in per-pupil funding ($7,397) Best Practices reduced from $52 to $16 per pupil Step Increase = 1.8% of total salaries Retirement Rate: 24.79% Health Care: 3.5% cap increase per PA152

4. Title I funding: Title I grant is annually $80,000 to $100,000, very small compared to most districts. Based on economic demographics of student population Grant is applied to reading and math assistance at the Middle School, which is the district’s designated Title I building With the constraints placed on Title I funds as a result of our “focus school” designation we have been reviewing the cost/benefit of continuing to apply for the grant Not knowing what the recommendation to the Board would be, administration conservatively assumed we would not apply for the grant, but left the related expenses in the budget Recommendation at this point is to continue to apply for the grant Budget projection revised to include the $100,000 in Title I revenue Change to Budget Projection

5. Revised Budget Projection 2013-14 Revenues$27,463,321 Expenses$28,892,006 Net Change($1,428,685) Beginning Fund Bal.$2,818,919 Ending Fund Bal.$1,390,234 Fund Balance %4.8%

6. Governor, House, and Senate have all introduced school aid budgets Governor’s Proposal: $34 equity payment to districts at base foundation ($6,966) bringing them to $7,000. Only proposed for 2013-14 No increase to foundation allowance for EGR ($7,397) Continuation of MSPERS offset credit and reduced performance based funding grant Reduction in Best Practices grant from $52/pupil to $16/pupil Net impact for EGR: $36/pupil decrease from 2012-13 ($108,000) State Budget Update

7. House Proposal: $34 equity payment to districts at base foundation ($6,966) bringing them to $7,000. Only proposed for 2013-14 No increase to foundation allowance for EGR ($7,397) Continuation of MSPERS offset credit and performance based funding grant at 2012-13 level Elimination of Best Practices grant ($52/pupil in 2012-13) Net impact for EGR: $52/pupil decrease from 2012-13 ($156,000) Senate Proposal: $34 equity payment for base foundation districts plus $50/$100 increase based on 2x formula. EGR: $89/pupil increase to foundation allowance ($7,486) Elimination of MSPERS credit funding ($105/pupil in 2012-13) Elimination of Best Practices grant ($52/pupil in 2012-13) Net impact for EGR: $68/pupil decrease from 2012-13 ($204,000) State Budget Update

8. Structural balance: Recommendation based on attempting to balance the budget without further use of fund balance District has used approximately $2 million of its fund balance the last four years including this year Structural deficit projected to increase the next 3 years with no overall increase in funding combined with projected personnel cost increases (approx. $400,000 to $500,000 per year) Proposed recommendations: Will highlight at what point administration feels the district isn’t “what it wants to be as a school district” Designed to assist Board in terms of potential use of fund balance, application of EGR Now funding Basis for recommendations

9. EGR Now donations Final State School Aid budget Enrollment Current projection is 3,000 student FTE Small senior class (210) will assist 2013-14 total If Kindergarten/Young 5 and incremental grade growth is normal, chance to exceed 3,000 student FTE Kindergarten enrollment growing, but still need additional enrollees Performance funding: State budget will probably include performance grant that we did not qualify for this year. Could potentially qualify for between $30 and $100 per pupil. Negotiations One year agreement(s) expires Budget Variables affecting projection

10. Three focus groups ranging from 6 to 9 members: Two staff groups One parent group Objectives given to focus groups: What do we want to be as a district? Educational program Co-curriculars Organizational structure Maximum efficiency Structurally balanced budget Each group held three two hour sessions Budget Focus Groups

11. Focus Groups Ideas to resolve budget deficit All Three Groups: Use of unrestricted fund balance ($500,000) Reduction or elimination of elementary paraeducator support Two Groups: Administrative reductions Food service cost efficiencies, additional revenue Request PTA’s to partially support building budgets Reduce high school guidance staffing Eliminate intervention specialist position Eliminate elementary general education social work Eliminate elementary world language One Group: Partial reduction of elementary specials Increase in pay to participate for athletics Use of restricted fund balance for potential new programs Negotiate a freeze of budgeted step increase Incorporation of potential EGR NOW donations

12. Proposed Reduction Recommendations

13. Consistent with focus group recommendations, savings will approximate ½ of administrative position Specific reduction will be determined in time for June budget hearing Total: $65,000 Administrative Savings

14. Board of Education and Teacher Association have agreed to offer an early retirement incentive program this spring Program requires a minimum of 4 teachers to elect the incentive Incentive is a sliding scale ranges from 25% (4 teachers) to 40% (10 or more teachers) of this year’s base salary 2013-14 savings will be approximately same at 4 or 10 teachers 2014-15 and beyond savings will be much greater, assisting structural balance for future years 2013-14 Savings: $80,000 Teacher Early Retirement Incentive

15. Outsource non-staff coaches: $30,000 Coaches that have no other employment through the district besides coaching would be outsourced to a third party company. Savings would be not incurring state retirement costs less third party fees. Pay to participate increase: $50,000 Proposal is to increase pay to participate to $250 per sport, with removal of the annual family cap. Current program is $190 per sport, with a $475 annual family cap Athletics

16. District has continued to struggle to breakeven since the consolidation with Grand Rapids. Avoiding further deficits, or utilizing profit to offset indirect expenses would assist the General Fund budget At current meal sales, staffing can be reduced in High School kitchen. Meal prices have not been raised in several years Total: $25,000 Food Service efficiencies/revenue increases

17. Staffing will be reduced by 0.5 FTE Specific reduction will be identified at the June budget hearing Total: $30,000 Reduce secretarial staffing

18. Current staffing levels: Young 5’s: 2 hours per day for half day program Kindergarten: 2 hours per day for full day program 1 st grade: 2 hours per day Some assistance from parent volunteers, but there will be a loss of service and flexibility for the classroom(s). Total: $140,000 Eliminate elementary paraprofessional positions

19. Due to projected low class sizes in next year’s 2 nd grade 3 sections currently totaling 53 students will reduced to sections Total: $90,000 Reduce one section of 2 nd grade

20. Service provided at elementary and middle school levels designed to help struggling general education students Intervention specialist position is a portion of a full time position 0.8 FTE intervention specialist, with individual teaching one class at middle school Service will be not be backfilled by other staff Total: $90,000 Eliminate intervention specialist position

21. Full elimination of K-5 program Middle school program will be adjusted in the future to accommodate students not having the elementary experience Total: $270,000 Eliminate elementary world language

22. Currently have three staff members providing guidance counseling services Increased workload for two remaining staff members Some services restructured or eliminated Other responsibilities shifted to administration and the guidance secretary Total: $120,000 Eliminate one high school guidance counseling position

23. Elementary students receive specials in a half day block once a week. Classroom teachers receive their weekly planning time during this half day Students from 3 classrooms will be spread into the two remaining specials, physical education and music, during the once per week half day Total: $180,000 Eliminate elementary art

24. Social work/counseling services at the elementary level will be reduced to only those required through special services Total: $75,000 Eliminate general education social work

25. Administrative Savings: $65,000 Early Retirement Incentive: $80,000 Outsource non-staff coaches: $30,000 Increase pay to participate to $250/sport: $50,000 Food Service staffing reduction/meal price increase: $25,000 Reduce secretarial staffing: $30,000 Elementary paraprofessional positions: $140,000 Reduce one section in 2 nd grade: $90,000 Intervention Specialist position: $90,000 Elementary world language: $270,000 One high school guidance position: $120,000 Elementary art: $180,000 Elementary general education social work: $75,000 Total: $1,245,000 Summary of Reductions Beyond the line, administration feels the district is no longer “what we want it to be”

26. Offset a portion of PAC management costs: $20,000 Researching potential for additional rental revenue, booster support of a portion of PAC management costs Restructuring of in-house/contracted maintenance staffing/costs: TBD Reviewing the cost benefit of in-house maintenance staff versus outside vendor support Partnership with neighboring district to assume our transportation needs: TBD Operational savings might not be significant Cost avoidance for future by not having to refresh bus fleet More reliable staffing and bus availability during peak usage Additional concepts being investigated

27. Revised Budget Projection CurrentRecommendationsProposed Revenues$27,463,321$62,500$27,525,821 Expenses$28,892,006($1,182,500)$27,709,506 Net Change($1,428,685)$1,245,000($183,685) Beginning Fund Bal.$2,818,919 Ending Fund Bal.$1,390,234$2,635,234 Fund Balance %4.8%9.51% Recommend eliminating remaining $183,685 through use of fund balance or compensation savings.

28. Focus Groups Ideas to resolve budget deficit All Three Groups: Use of unrestricted fund balance ($500,000) Reduction or elimination of elementary paraeducator support Two Groups: Administrative reductions Food service cost efficiencies, additional revenue Request PTA’s to partially support building budgets Reduce high school guidance staffing Eliminate intervention specialist position Eliminate elementary general education social work Eliminate elementary world language One Group: Partial reduction of elementary specials Increase in pay to participate for athletics Use of restricted fund balance for potential new programs Negotiate a freeze of budgeted step increase Incorporation of potential EGR NOW donations Items shaded in red are included in final proposal

29. Collective Bargaining with employee associations Starting in late April Monitor state budget process until state budget is adopted Adjust budget assumptions if there are modifications from the Governor’s proposal Monitor potential legislation in Lansing that might affect the district budget Community & Staff discussions about budget proposal Now through the end of May June Budget Hearing with Board of Education Adoption of 2013-14 budget – June Board of Ed meeting Budget Process – Remainder of year

30. Questions?