Novi Faces Nearly $4 Million Deficit in 2011-12 School Budget

Novi Community School District will run out of money next year if trend continues.

The Novi Community School District is estimated to run out of money next year if it does not find ways to cut spending. The Board of Education passed the district’s 2011-2012 budget Thursday, which has a deficit of nearly $4 million.

This is the sixth of the past seven years in which the district has spent more than it receives. A projection for 2012-13 estimated by outgoing Assistant Superintendent of Business and Operations Gail Credit shows a deficit of nearly $7.5 million resulting in a negative fund balance of almost $2 million.

The following table shows a three-year budget comparison:

2010-11  Final 2011-12 Preliminary 2012-13 Projected Beginning Fund Balance 9,526,455 9,396,547 5,499,572 Receipts 69,170,593 66,691,333 65,678,362 Expenses 69,300,501 70,588,308 73,153,201 Difference -129,908 -3,896,975 -7,474,839 Ending Fund Balance 9,396,547 5,499,572 -1,975,26

Novi, like most school districts in Michigan, faces challenging financial times due to Michigan’s poor economy and cuts in state funding. By dipping into its savings, the board was able to meet its budget goals this year of keeping a 10 percent fund balance and not cutting programming.

“The hope is that as we move forward we can find ways to balance the budget without having to dip into our fund equity as much as we have in the past,” said incoming Superintendent Dr. Steve Matthews. “Eventually, you’ll run out of money. So it’s difficult economic times, but we have to find some solutions, and that’s what we’re going to work on this year.”

The Board has budgeted for $66,691,333 in revenue and $70,588,308 in expenses for 2011-12.

Increases in expenses include a state-mandated retirement increase of 3.8 percent, an increase in health insurance rates of 10.2-12 percent, and the purchase of three new buses for $259,000. The early retirement incentive offered to qualifying teachers in 2009-2010 will cost the district $450,000 in 2011-12.

Decreases in revenue include an unprecedented $470 per pupil cut from state funding. The taxable values for the district also decreased overall by 7.685 percent.

The budget was passed unanimously, except for Treasurer Ann Glubzinski, who was absent. Glubzinski publicly stated her support of the budget at the Board’s June 23 meeting. 

Budget Cuts

To help balance the budget, staff at all levels made concessions, but some Board members do not think it is enough. 

Concessions include the following:

  • Teachers agreed to take a 1 percent pay cut, pay 15 percent toward their health care and take 1.5 furlough days. A clause in the two-year contract allows the teachers to go back to the table to negotiate salaries after the first year.
  • Food service employees and educational support personnel agreed to a one-year wage freeze, 1.5 furlough days, and to pay 15 percent toward their health care. They can also renegotiate salaries after the first year of the contract.
  • Custodial and maintenance employees agreed to a 1 percent pay cut, reduction of two paid holidays and to pay 15 percent toward their health care. They, too, can renegotiate salaries after the first year of the contract.
  • Seven new administrators were hired in at 3 percent less than their predecessors.
  • Administration, including assistant superintendents and principals, agreed to 1.5 furlough days and to pay 15 percent toward their health care.


Both Vice President Dennis O’Connor and Trustee Jason Manar voted against the administrative contracts because the administrators did not take a pay cut like the teachers.

“I don’t feel that I can support it…because I feel like you lead from the top-down,” Manar said at the meeting.

The approximately $121,000 in concessions made by administration exceeds the Board’s goal of achieving $118,700 in administrative concessions. Yet, $36,700 of that savings came from hiring the new administrators at a lower pay - not from concessions made by current administrators.

The approved budget does not reflect the recent staff contract agreements, but includes 26 teacher layoff. All once concessions were made. An amendment to the budget will be made in the fall to reflect the agreements. 

The Board was required by Michigan law to pass its budget by June 30.

novi July 06, 2011 at 06:22 AM
where is the adminstration pay cut?
novi July 08, 2011 at 01:01 AM
Maybe some of the school board needs to be recalled? They say we still will have money problems and they did not make the adminstration take a pay cut. Why not out source secretaries? They can have Kelly services that would have to save money.
Reb July 09, 2011 at 11:57 AM
While administrators "as a whole" reduced their pay, none of them actually took a pay cut. How? Well, there were a lot of new administrators hired of late. Most (if not all) came in at a lower pay than their predecessor. Mr Schram (who negotiated on behalf of the district) used this reduction to meet the parameters set by the school board. As Trustee Manar and O'Connor so eloquently pointed out, this did not pass the smell test. Teachers took cuts and administrators did not and this is not leadership. I still cannot understand why the school board members who were in attendance at last years meeting (all except Mr O'Connor) voted for 1% increases for administrators. Those are the folks you should be looking at.


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