We had another great Annual Conference, this time in Detroit. Thanks again to the MSBO staff, Board, leadership group, exhibitors, speakers and especially you the members. As we started off the conference with Erik Wahl, our keynote speaker, he challenged us to use the “Art of Vision” and to not forget the creative side of our brains. As we deal with all the problems from school funding to Adequate Yearly Progress, we will need to be creative to meet the challenges of the immediate future and beyond.
As we enter one of the most financially challenging times in Michigan’s history, you as MSBO members need to be the financial leaders for your district, even if you have not played that role in the past, especially if you have not played that role in the past.
School districts are facing unprecedented shortfalls in basic school funding along with large infusions of restricted funds. The temptation will be to use these Federal stimulus dollars to continue the status quo, but we need to use these stimulus funds to help our districts move to the reality of lower funding. We do not see more dollars for schools in the future. In the short term (1-3 years) the foundation allowance may see reductions and for years to come, minimal to slow growth.
Stimulus funds can be used to fill the shortfall in school funding this year and next, but you must be careful to use those funds properly. Pay special attention to your cash flow schedules and projections - make sure you are taking into consideration the effect of the state’s 2009-10 school funding shortfall estimate. Taking the shortfall projected as a result of the May Revenue Consensus Conference and increasing it by the revenue enhancements included in the Governor’s budget proposal, we are looking at a potential decrease in 2009-10 state aid of between $521 and $625 per pupil. Of course, that depends on who you are listening to. You will need to determine the difference in timing between the normal state aid cash flow (that will be reduced) and the replacement cash flow from the Federal stimulus dollars received on a reimbursement basis. Either way, there does not appear to be enough Federal stabilization funds to fully implement the Governor’s budget proposal for 2009-10 without significant reductions to categorical funding and/or the foundation allowance. There should be no surprise that there will be changes to the School Aid Budget between now and late summer/early fall.
The future will require us to examine how we educate fewer students with the same per pupil amount of funding (a net funding decrease.). Will those changes come from ideas such as virtual classrooms or computer assisted learning? How will we bridge the gap in funding until those and other ideas come to fruition?
As we redefine how our districts will operate over the next number of years, we will need to look forward 3 to 4 years to see the full impact of financial decisions that are being made. We will have to acknowledge the simple fact that the Michigan economy will have a slow recovery, hope our School Aid Fund will continue to collect enough needed dollars, and accept the fact that Federal stimulus money will run out by the end of the coming fiscal year. Your board and superintendent will need a global look at your district’s budget and the MSBO Dynamic Budget Projection software is the tool to help you do that. Many districts have purchased the software and now is the perfect time to use it to tell the long-range story and reality we all face. It facilitates communicating financial information more easily and understandable for school districts.
Superintendents and school boards need to see the multi-year financial picture in a way that allows them to see that this is a problem that demands schools to have a corresponding multi-year plan. The real problem is not this year (2008-09) or next (2009-10), but the following year (2010-11). On top of the more global issues, your district is most likely dealing with declining enrollment, schools of choice issues, and meeting Adequate Yearly Progress among other issues.
As State Superintendent Mike Flanagan has said, you need to “Reimagine Education” – and that is what it will take for many of us. It will mean doing more with less, which we have already been doing over the last 5-7 years. It will mean developing collaborative programs.
It will require districts to ask the following questions. How can we work together as ISD’s or districts to share personnel and functions? Are we being efficient? Can we improve? How can we realign our costs to meet declining enrollment, which means fewer dollars? Does our salary schedule reflect times past when we had more students, or does our salary schedule look more like the smaller district we are becoming? Can we move to a two-tiered salary schedule to help in the long term? Can we move to statewide salary schedule or statewide health insurance program?
As your district addresses these challenges and many others, you need to be the financial leader who guides your district during these tough financial times.
What is MSBO going to do to help?
- Help with ideas and seek legislative changes such as:
- Seeking more dollars for education
- Empowering deficit districts and/or financial managers to deal with the structural problems that these schools are facing with tools to reopen contracts, etc.
- Seeking ways to reduce burdensome state mandates
- Implementing cost containment ideas such as statewide salary schedules, statewide health insurance programs, ways to lower the cost of the retirement program, etc.
- Share ideas with and from you:
- We will be surveying you
- How we can help you deal with these budget problems
- What barriers are you facing
- Where can we provide assistance at a state level
MSBO wants to provide solutions and tools to help you provide financial leadership to your district. Help us help you!