Despite Challenges to Budget, District to Remain 'Full Service' for Students

The Ferndale Board of Education's budget takes effect Friday.

The district administration was able to pass a budget without any major cuts to programming. However, because the district's fiscal year begins July 1, and the state's fiscal year begins Oct. 1, the district will have to borrow $4 million from a loan request process through the Michigan Finance Authority, a division of the Michigan Department of Treasury.

Borrowing this money, however, is not related to a budget deficit, Ferndale Schools Superintendent Gary Meier said.

"This has nothing to do with a budget deficit. We've ended several years with a surplus," he said. "We have to borrow in anticipation of state aid. The funding goes toward general operations, making payroll."

Meier said that because of the start date of the state's fiscal year, the school will have no revenue until Oct. 20. He said that this action of borrowing money is common practice among districts. Last year, Ferndale Public Schools borrowed $3 million.

"We'll pay this money back next August," he said. "The interest rate is practically nothing. We paid $11,000 in interest on the $3 million we borrowed last year."

The district is borrowing more this year because there has been a lot of uncertainty regarding state funding. "When we ran the numbers and looked at it, we decided that $4 million was what we needed," said Maureen Adams, executive director of finance.

Budgeting challenges

The budget, though balanced and with last year's budget ending in a surplus, has been hit with challenges. Adams estimated that Ferndale has to take a $503 per-pupil reduction in foundation allowance, which is about a $735,000 loss in revenue for the year. Special education revenue has dipped about $400,000. This money comes from a countywide special education millage and, just like municipalities and revenue problems, property values have affected funding.

The district also may encounter teacher layoffs.

Meier said layoffs are issued every year. He said that last year, about 40 teachers were pink-slipped, but the district eventually recalled all of them. As of Monday, 39 of the 64 teachers had already been called back, Meier said.

The reason for pink-slipping them is flexibility, he said. "It's really about having as much flexibility as possible," he said. "Quite frankly, we don't want anyone on the layoff list. … We'll continue to chip away at it. Some will stay on the layoff list, but that number will be minimal."

Deputy Superintendent Henry Gold said the district has a lot of positions dependent on state and federal funding that has yet to finalized, and he said a number of positions are specific to enrollment.

Once these are figured out, funding could be available to bring more teachers back. "We're obligated to the budget," Gold said.

Meier said the layoffs will continue to be worked on through the summer and that the landscape won't be finalized until the start of the year.

"The layoffs don't mean anything at this point," he said.

Snyder's best practices

The district has the ability to get some revenue back through "best practices" incentives coming down from Gov. Rick Snyder.

"We could get $100 per pupil allowance by meeting (state) best practices," Adams said. "If we do complete that, it is an additional $400,000 in revenue that the district would be eligible for."

Among those best practices:

• District employees must  have a 10 percent insurance premium.
• The district must be the health care provider for employees.
• A consolidation of service plan must be in place with municipalities or other school districts.
• The district must engage in competitive bidding and outside contracting.
• The district must adopt a dashboard that displays finances and school achievement data.

Though Snyder has issued these points, they lack specific language, Meier said.

"We don't know what it will look like. Realistically, we don't know if we can meet those without knowing the final criteria. They don't have specific language. I don't know without seeing specific criteria," Meier said.

Meier said though the district is lacking specifics on the best practices, it can preliminarily say it has participated in some of them. For the consolidation of services, the district utilizes (CASA) with six school districts.

The Ferndale district also entered into a contract with Oak Park to manage its transportation maintenance. As for engaging in competitive bidding, the district has bid out and contracted for its food service.

"We don't panic. We don’t wring our hands," Meier said. "Our goal is to offer a full-service school with educational services."