Budget: Deficit looms for Otsego schools

By Ryan Lewis
Staff Writer

The rough numbers are looking rough for the Otsego Public Schools 2008-09 budget, according to superintendent Denny Patzer.

“The numbers are a little astounding,” he said at the board’s workshop Monday, Feb. 25.

Based on many numbers that could yet fluctuate, Patzer pegs next year’s deficit at nearly $1 million.

“We’re going to continue to refine those numbers over the next few months,” Patzer said.

Declining enrollment is one of the more troubling factors leading to the expected shortfall.

“Our student count since the fall is down 25 kids,” he said. “We’ve had a 20-student decline in the last two weeks. It’s a little alarming to us.”

Part of that alarm stems from the fact that just last year the district had no deficit because of enrollment gains.

Patzer said the bulk of the recent enrollment losses were due to families relocating outside of the county.

He and director of business Rhonda Plumley said they were currently building in a $100,000 loss due to falling enrollment.

The biggest expected hits to the budget will come from salary and benefits increases for the district’s 250 employees. The increases are expected to total $800,000.

Patzer said that includes estimated increases in retirement costs and federal income taxes.

Health insurance benefits are also expected to rise by 10 percent, though Patzer believes there is a possibility of a smaller increase.

“One (insurance provider) told us that was what it was going to be,” Patzer said. “But I’m starting to hear that the increase could be half that. Usually at the end of April, MESSA (Michigan Education Special Services Association) will put information out (about what it expects).”

The costs of running and maintaining the new buildings have not been a negative factor for the budget, Patzer said.

“Our gas and electric bills have actually gone down,” he said. “The new windows and boilers are efficient; whole heating systems were replaced and they use less energy. We’re very pleased with results.”

The new high school has no basis for comparison yet, though Patzer said the administration will monitor closely to find ways to adjust things like light and heating controls.

Some help to lower the deficit could come from the state.

Patzer said he is planning on a $108 per-pupil increase from the state school aid fund.

“We’re hoping to at least get the $108. The governor has a plan to set the increase at $216, and of course that would help. But that is a wild card,” he said.

Board member Renny Ransbottom agreed.

“I’ve seen (state legislators) do it before,” Ransbottom said. “It’s an election year. Then come January and February, they’re talking pro-rations,” which are mid-year changes in the state aid payments that retroactively change the per-pupil amounts paid to districts.

The other way to drive down the deficit is a series of cuts, and Patzer and building administrators are targeting $400,000 of them.

“We are talking curriculum, supplies, and, because of adjustments due to declining enrollment, there might be staff cuts,” Patzer said. “A lot of special education numbers are going down, and we’re looking to see how that might impact the budget.

“We want to (keep cuts) away from programs for kids. But these are tough times.”

The fund balance—the district’s savings—is $4.08 million as of July 2007, which represents 22 percent of operating expenses (one of the higher percentage fund balances in the county). That will be reduced by an estimated $250,000 to close out this school year’s budget.

Patzer pledged to school board members to present a more detailed report on next year’s budget at the March 10 meeting at 7 p.m. at the Washington Street Elementary School meeting center.

Ryan Lewis may be contacted at (269) 673-5534 or e-mailed at rmlewis@allegannews.com.