Novi Passes 'Responsible' 2012-13 School Budget
The Novi Board of Education pushed staff to maintain a 10 percent fund balance.
The Novi Board of Education passed the 2012-13 school year budget Thursday night, which estimates a nearly $2 million dip into the district's savings but maintains the board's rule of having a 10 percent fund balance.
Novi Superintendent Dr. Steve Matthews said that the budget keeps with the district's goals with providing students with high-quality education.
"We're not cutting programs. We're not laying off staff. We're managing the finances, maintaining an adequate fund balance…so we believe this is a responsible budget as we move forward," he said.
2012-13 Original Budget Summary
|2011-12 Budget Amendment 3||2012-13 Original Budget|
|Expenditures over Revenue||-$2,680,616||-$1,928,620|
|Fund Balance at the beginning of the year||$11,527,101||$8,846,485|
|Fund balance at the end of the year||$8,846,485||$6,917,865|
Maintaining a 10 percent fund balance
Superintendent of Business and Operations Steve Barr presented the board with the budget at its meeting Thursday night, which originally had a fund balance of 9.82 percent. Members of the board then stated that they would not pass a budget with less than a 10 percent fund balance.
Barr said that there are still a lot of unknowns in the budget, such as a possible retirement reform being passed by state legislature, changes to state aid and the exact enrollment count for next year. Matthews added that the budget would have a final fund balance of 10 percent by the time the final amendments are done by the end of the next school year.
Yet, several members of the board said they were not comfortable with passing a budget that does not meet the board's fund balance rule.
"I fully recognize that this is a living, breathing, every day changing document, but I do have concern about any kind of precedent that we're going to present something that has a number less than 10 percent," said Board President Bruce Bagdady. "Recognizing that right now at this moment, it sounds like we're above that 10 percent, but I do have a hard time voting on something that black and white says something other than 10 percent."
Members asked Barr if he would excuse himself from the meeting to update the budget with the most recent numbers, which included two more retirements than budgeted that were passed by the board earlier in the meeting, then bring the budget back for a vote.
The Board is required by Michigan law to pass its budget by June 30, and members decided they did not want to postpone the vote until next week because two members would be out of town.
"I know some people might think it's an exercise in silliness, but on the other hand we've always said we're steadfast on this and we have to demonstrate that," Bagdady said.
Adding the retirements into the budget resulted in a savings big enough to bring the fund balance up to 10.01 percent, assuming some numbers based on whom is hired to fill those positions. Usually, a younger teacher is hired with a lower salary and benefits cost than a teacher who retires.
This is the seventh of the past eight years in which the district has spent more than it receives.
Barr pointed out the following challenges, among others, the district faces:
- Continued flat or reduced school funding from the state legislature since 2002
- Declining enrollment
- Countywide declining taxable values
Barr estimates that Novi will receive a decrease of $56 per pupil in funding this year, troubling after $668 decrease in per pupil funding last year.
Barr also expects costs for utilities will increase compared to last year, since Novi had a mild winter and a low gas bill last year.
Matthews said the district will be working to break even in the budget in the future.
"I would like to reinforce that we understand that we need to work to get our revenues and our expenses in line," Matthews said. "We cannot continue to have expenses in excess of our revenues. We believe that that's a problem we can address in stages in the next several years."
Forecasted Revenue and Expenditures
|2012-13 Original Budget||2013-14 Projected Budget||2014-15 Projected Budget||2015-16 Projected Budget|
|Expenditures over Revenue||-$1,928,620||-$782,339||-$673,078||-$402,100|
|Fund balance at the beginning of the year||$8,846,485||$6,917,865||$6,135,526||$5,462,448|
|Fund balance at the end of the year||$6,917,865||$6,135,526||$5,462,448||$5,060,348|
|Fund balance as a percentage of expenditures||10.01%||9.07%||8.11%||7.58%|
A breakdown of expenditures, taxable values, millage rates and enrollment can be found on the attached PDF. (The PDF does not reflect changes to the budget made during the meeting.)