Ypsilanti-Willow Run approve budget amendments, deficit elimination plans totaling $11.9M
AnnArbor.com file photo
The state-mandated plans show together the two struggling school districts have a cumulative debt of about $11.97 million.
In Ypsilanti’s budget amendment, the Board of Education finalized mid-year cuts of 4.5 teachers from its secondary buildings. Two of the eliminated teachers were from Ypsilanti’s New Tech program and the remaining 2.5 were from the middle and high schools, said Superintendent Dedrick Martin.
The budget amendment approved Monday still contains a structural deficit of $88,971, which will be added to the district’s total fund balance deficit.
District accountant Cathy Secor said in most cases, districts don’t use their entire budget. So by the end of the school year, the district may be able to close the $88,000 shortfall with money appropriated but not spent, she said.
Willow Run also passed a budget amendment Monday; however, the district did not need to make any mid-year reductions, nor did it have a current-year structural deficit.
When Ypsilanti Public Schools adopted its budget in June 2012, school officials projected expenditures of $35.77 million, revenues of $39.85 million and a fund balance deficit of $6.56 million by July 1, 2013.
The district had a deficit of about $9.9 million going into the current school year, so it had projected to close its deficit by about $3.3 million. The district now is expected to end the 2012-13 academic year on June 30 with a deficit of $9.1 million.
Ypsilanti’s latest projected revenues and expenditures for the year are $39.45 million and $38.25 million, respectively.
School officials blamed declining enrollment for the budget amendment. Ypsilanti lost about 223 students, the equivalent of nearly $1.7 million in per-pupil funding from the state.
“What you adopt in June (for the budget), we take our best guess,” Martin said. “But it’s always a guess at how many kids you’re going to have. I don’t think we saw any massive, wild swings. It was really just that student total that brought us the most amount of reduced revenue.”
However, the district’s revenue is not coming in as low as expected from the loss of the students, thanks to the upcoming sale of the Regional Career Technical Center’s student-built home, $3,000 in website advertising and a tech readiness grant, totaling about $450,000 in unanticipated revenues.
The initial sale of the RCTC house for $163,500 fell through shortly after the offer was made in December, Martin said. But the district was fortunate to have had a back-up offer come in just days after the first fell through, he added.
Martin said the sale of the home was included in the budget amendment as a projected $150,000.
“The selling price is comparable (to the first offer). The second offer is down just a little bit around $160,000,” he said. “We put it at $150,000, figuring if the sale goes through and after the realtor gets his commission that would be the revenue earned.”
This year’s process of drafting deficit elimination plans (DEPs) actually was quicker and easier for the Ypsilanti and Willow Run school districts because of the voter-approved consolidation, Martin said.
“The DEP is never finished until you pay off the debt,” Martin said. “ Because we had a definitive date that was approaching, we would have had to make much deeper mid-year cuts” if the districts weren’t consolidating.
State law requires any public school district or charter academy operating with a negative fund balance to submit an annual plan to the Michigan Department of Education detailing how they intend to get their finances back in shape.
Districts typically have two years to restore their fund balances, unless given an extension by the state, and must outline the reductions necessary in each of those years to have a positive bank account in the end.
In Ypsilanti’s most recent DEP — prior to the one approved Monday — the Board of Education OK’d closing at least one elementary building in the 2013-14 academic year. Willow Run’s last DEP called for closing the high school by June 30, 2014, its state-assigned deadline for getting out of debt.
But Martin said because of the upcoming consolidation, Ypsilanti did not have to go through the process of deliberating how deep the cuts would need to be in order to pay back the amount it owed by 2015, Ypsilanti’s state-set deadline.
“We’re moving on the promise from the state superintendent that they would look at restructuring the debt for the combined district in a way that doesn’t crush the district under it’s own weight,” Martin said. “ The state has given both of us the license to end our (deficit elimination) plans after this year, in terms of not having to do whatever we were going to do in 2014 and 2015.
“ It’s really a DEP more so to give information about where we hope to finish the year and (the state) trying to make sure both districts are not just adding expenditures frivolously saying, ‘Oh, we’re going to unify, so who cares,’” Martin added.
During the summer, State Superintendent Mike Flanagan told Ypsilanti and Willow Run school officials he would consider extending the new unified district’s debt repayment period for up to 20 years.
Martin said officials hope to hear more definitively in the next couple months how long the repayment period will be. The new school district will have to submit a deficit elimination plan to the state by July 31, 2013, officials said.