The Manchester Enterprise
A Heritage Newspaper
Weekly Publication
District struggles with state funding shortfall
School Board seeks alternative funding for capital improvements
By Daniel Lai, Editor
PUBLISHED: October 9, 2008
As election year draws to a close, many state legislators have made school funding a hallmark of their re-election campaign. However, memories of last year's state budget crisis and a sinking economy have left several educators pondering the future of education in Michigan.
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Manchester Community Schools Superintendent Shawn Lewis-Lakin recently held a community forum celebrating the fact that the school district is the only Washtenaw County district in which all schools received "A" grades in the state accreditation system.
"This community can be proud of its schools, but the excellence we have achieved is threatened due to continued financial challenges," Lewis-Lakin said. "Funding increases from the state are not keeping pace with increasing expenses and we're limited on how to supplement that funding."
Like many districts around the state, the lack of funding has caused Manchester to tighten its financial belt.
"This isn't a problem just for the Manchester Community Schools, but it is a state-wide problem," he said. "Twenty-five Michigan school districts were operating in a deficit budget during the 2007-08 year, which means they had zero fund equity and a deficit budget.
"Indications are that several more districts will move into this crisis situation this year."
During the 2006-07 school year, the district operated on close to a half million budget deficit. Since then Lewis-Lakin said the Board of Education has worked to reduce the deficit through various budget cuts.
"We worked through the 2007-08 year to bring the budget into balance," he said. "For the 2008-09 year we again made cuts, but our preliminary budget is a deficit budget."
Lewis-Lakin attributes the crisis to a decline in enrollment and lack of funding from the state Legislature.
"The enrollment of our schools has been declining since it peaked in the 2005-06 school year," he said. "Statewide current projections suggest that enrollment will drop 25,000 students per year for the next five to 10 years."
To help offset some of the revenue shortfall, Lewis-Lakin said the district has negotiated health care insurance savings with employees, reduced expenses in energy consumption, classroom supplies and transportation, and has sought to protect the day-to-day operating budget by deferring capital needs (buses, computers and building upgrades).
The district has also reduced staffing in secretarial and custodial areas, reduced central office staffing, consolidated some services with other districts (for example, by moving payroll services to the Washtenaw Independent School District), reduced the number of work days and paid holidays and negotiated a freeze on support staff wages.
Lewis-Lakin emphasized that the search for savings is ongoing. For example, administrative staff will move to a lower cost health insurance plan as of Jan. 1, 2009.
"We've deferred capital expenses to minimize cuts that impact classrooms. However, we must face the reality that capital expenses, and in particular bus purchases and technology updates, cannot be indefinitely deferred," Lewis-Lakin said.
The forum was also used as a springboard to discuss feedback from residents about possible funding strategies for the district.
"State law prohibits local school districts from raising operating or general funds," he said.
That leaves the district with two main methods to raise revenue locally: a sinking fund or selling bonds for capital needs.
A sinking fund is a major repair fund that is designed for specific uses, which does not include bus or technology purchases. Lewis-Lakin said the Manchester community supported a sinking fund in the early 1980s through 1994 at an annual levy of approximately 1.5 mills.
"We do not currently have a sinking fund, so a sinking fund levy would be a 'new' tax," he said.
The other option would be a bond proposal approved by voters in a special election, which could be allocated to the capital needs deferred in recent budgets and safety improvements.
"This would not add funds to the general fund, but it would protect the existing general fund for instructional uses," Lewis-Lakin said.
Voters passed a bond proposal in 2001 in which money from the bonds was allocated to the construction of the new high school and renovations at the district's other facilities. At the time the 2001 bonds were approved, a debt millage set at 7 mills was projected through 2028; the debt millage would then begin to decrease before reaching zero by 2031.
Lewis-Lakin said because the district has been able to refinance the bonds twice, the debt millage is currently scheduled to begin decreasing in 2023.
"We are now looking at a way to recapture those capital funds freed up through the refinancing that the district initiated," he said.
If voters approved a new $2.6 million bond package, it would not increase the tax rate paid by district property owners but merely maintain the 7 mills through 2028, as was the projection in 2001 before the refinancing.
"It would renew the 2001 commitment," he said.
Lewis-Lakin emphasized that the Board is still researching this option.
"We've discussed various scenarios for over a year, including doing nothing but continuing to make cuts," he said. "We're trying to be as open as we can be. We don't see relief coming from the state, given the state of Michigan's economy and so we have to ask ourselves, 'What can Manchester do to take care of Manchester?'"
The prospective bond proposal will also not eliminate the need for budget cuts in the future, he said.
"We are trying to put a strategy in place that will make cuts to our budget less Draconian than they would be otherwise," Lewis-Lakin said. "I don't see a way forward that does not include additional spending reductions. But, we want to make sure we do all that we can to minimize the effects of such cuts and to protect the excellent quality of education for which the Manchester Community Schools are known."
For more information on the school funding crisis, visit the district's Web site at www.mcs.k12.mi.us to view a downloadable presentation. Questions concerning school funding can be directed to Lewis-Lakin's office at 428-9711 or e-mail slewis-lakin@mcs.k12.mi.us.
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