Tecumseh Schools face financial challenges as revenues decline

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By Bill Wright, Chief Financial Officer, Tecumseh Public Schools 

Last week, the forecast for the shortfall in the revenue for the Tecumseh Public Schools was highlighted.  In the current fiscal year (FY), 2009-2010, TPS will be forced to operate on $1,890,572 (or 8.1%) less formula revenue than the prior fiscal year, 2008-2009. State aid formula revenue is defined as the district foundation allowance (FA) multiplied by the district student enrollment. In FY-2010-2011, the situation is projected to deteriorate as the formula revenue will yield $2,739,476 (or 12.7%) less than the current year.  When combined, next year’s (2010-2011) state aid formula will yield $4,630,048 (or 19.8%) less than last year (2008-2009).  As we discussed, the shortfall in formula revenue is based on two factors; declining student enrollment and cuts in the state school aid foundation allowance.  For next year (2010-2011) the formula revenue is only slightly above (less than $10,000 above) the formula revenue in the 1999-2000 fiscal year, eleven years ago.

With the steep declines in revenue, expenditures have naturally continued to rise. With the majority, or about 85% of the TPS budget allocated to staff salaries and benefits, much of the overall increase in district expenditures can be attributed to those expenditures typically associated with staff costs. Energy and school supply expenditures have also risen significantly over the past several years. 

 Examples of staff-related cost increases can be seen in the following charts.  Monthly costs for the district’s primary health insurance package increased from $706.86 per month in 2000-2001 to $1,300.42 (or 83.8%) this year.  Please refer to Chart 1. Some employee groups are currently paying for a portion of their healthcare premiums.  Please refer to Table 1. 

 TPS participates in the Michigan Public School EmployeeRetirement System (MPSERS) and contributes a statutory-based rate on each dollar of earned income for each employee of the district.  This year’s rate is 16.94% and has generally increased over the past several years.  Please refer to Chart 2.  Several employees also contribute a portion of their salary to MPSERS.

 Additional financial information will be discussed with the Special Economic Advisory Committee (SEAC) at the group’s first meeting onThursday, December 10, 2009. Subsequent meetings with TPS staff and community groups are scheduled for January, 2010.  Also, the TPS website will be updated with current financial information as the district is making additional efforts to update the community and district stake holders regarding the overall and ever-changing position of the school district finances.

Submitted by: Bill Wright, TPS Chief Financial Officer

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