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					Financial Update and Impact




   Pinconning Area School District
            January 2010
Michigan and National Economy
 National recession is expected to last
 until at least into the first quarter of 2010
 Michigan – recession projected to bottom
 out in the summer quarter of 2011
 Michigan - Lost 540,000 jobs since 2000
 Michigan - Projected additional job loss
 of 397,000 through year 2011
 Unemployment rate of 15% for 2009
 Data from University of Michigan and Dana Johnson, Chief Economist – Comerica Bank
 and Maureen Maquire, economist and President of ThinkResearch and CSNews Research Parnter on the Forecast Study
 Effect on PASD since 2002
Per pupil funding – Increased 1.8% per year
Employee retirement – Increased about 3.5%
per year
Health insurance – Increased over 5% per
year (even with benefit adjustments)
Student enrollment – Declined 3.1% per year
General Fund revenue - $13.9 million for
2008-09
Revenue has decreased an average of 1%
per year for seven years.
 Why is enrollment declining?
Birth counts in Michigan were 153,000 in
1990 and were 122,000 in 2008 (about 20%
decline)
PASD Kindergarten down about 20% since
2001
Parochial – enrollment is down 40% from
2001
PASD graduates around 135 seniors each
year, but only has about 100 kindergartners.
 Cumulative Cost of Declining Enrollment
                                            Cumulative    Cumulative
         Foundation Year/Year   Year/Year
                                            Enrollment       Lost
Year     Allowance Enrollment     Lost       Decline       Revenue
                     Decline    Revenue
‘02-03      $6,700         83    $556.100            83     $556,100
03-04       $6,700         54    $361,800           137     $917,900

04-05       $6,700         27    $180,900           164    $1,098,800
‘05-06      $6,875         65    $446,875           229    $1,545,675
‘06-07      $7,085         86    $609,310           315    $2,154,985
‘07-08      $7,204         70    $504,280           385     2,659,265
‘08-09      $7,316         34    $248,744           419    $2,908,009

09-10       $7,151         88    $629,288           507    $3,537,297
                                            Total         $15,378,0311
         Budget Adjustments
             2001-2009
Teaching and support positions reduced or
eliminated to reflect reductions in enrollment
Administrative positions eliminated and
combined
Health Insurance benefit changes and staff
premium contribution
Single bus route for transportation
Closed Garfield Elementary
Food Service charged more for overhead
       Budget Adjustments
           2001-2009
Implemented Pay to Participate for HS and
MS Athletes
Staff wage freezes
Reduced school/calendar days
Community Education programs eliminated
Sub-contracted out teacher substitutes
Reduced Building and Department Budgets
  Advantages and Disadvantages
           of a Buyout
Advantages
  Avoids layoffs
  Avoids unemployment costs
  Saves money over one or two years
  Significant short-term savings

Disadvantages
  Disrupts normal retirement patterns
  Mass exodus of experienced teachers
  Costs the district money over time
Why Doesn’t a Buyout Work?
Generally, people can’t afford to retire
more than two years early
Buyout gives away the savings between
step 10 and step 0
Each subsequent year, the replacement
teacher is one or two steps ahead on the
salary schedule (prematurely hired instead
of the normal replacement process)
    What is the Biggest Issue
        Facing PASD?
Health Insurance?
Retirement Rate?
Lack of Funding From the State?
Fuel or Utility Costs?
Although all of the above are important,
one of the biggest issue facing PASD is:

  DECLINING ENROLLMENT
   History of Declining Enrollment
Fall K-12 Enrollment Counts 2002-09
    2045
           1962
                  1908   1881
                                1816
                                       1730
                                              1660   1626
                                                            1538




   2001 2002 2003 2004 2005 2006 2007 2008 2009
Enrollment by Level
 Fall 2002 & 2009

 932

       Loss of 24%
                                             Loss of 8%
       704
                                              648
                                                     594
                         Loss of 32%


                        349

                                 238




Elementary           Middle School           High School
Enrollment            Enrollment             Enrollment
                     Fall 2002   Fall 2009
Enrollment Decline by Level
     Fall 2002 to 2009

            228




                                      111




                                                                51




    Elementary Enrollment   Middle School Enrollment   High School Enrollment
           Decline                   Decline                   Decline
     Elementary Enrollment
% Decline by School - 2002 to 2009
      438
            18% Loss

            362


                                               36% Loss
                       25% Loss                 255
                          239


                                   179
                                                      163




      CENTRAL            LINWOOD               MT FOREST
                       Fall 2002   Fall 2009
Fall K-12 Enrollment Projected
        Through 2013

     1,549

             1,521           Loss of 8%


                     1,467


                                   1,432




     2010    2011    2012           2013
                         Major Changes in State’s
                         Demographic Composition
                                 Ahead

                                           -3.9%
            7,000

            6,000

            5,000
Thousands




            4,000
                                                            2007
            3,000
                    ---14.3%                                2017
            2,000                                  +31.5%
                               -8.5%
            1,000

               0
                      5-17     18-24      16-64      65+
                                  Age Groups
       Outlying Elementary
        School of Choice
Currently four students with school of
choice at Linwood Elementary.
Currently two students with school of
choice at Mt. Forest.
Elementary/Middle School Grade
  Level Comparison of Districts
   K-4 Elementary / 5-8 Middle School
   – Standish

   K-5 Elementary / 6-8 Middle School
   –   Arenac-Eastern
   –   AuGres
   –   Bangor
   –   Bay City
   –   Essexville

   K-6 Elementary / 7-8 Middle School
   – Pinconning
Elementary Building Configuration
                    Central   Linwood   Mt. Forest

 Total              23        14        13
 Grade K-6          14        9         8
 Young 5            1         0         0

 Sp Ed              2         1         1

 Library            1         1         1

 Computer Lab       1         Lab In    1
                              Library
 Music/Health       1         2         1
 ISD/Sp Ed Itinerant 1        0         0
 Title              1         1         1
 Empty              1         0         0
  So, What Does This Mean?
District-wide, there are 11 elementary rooms not
being used for core K-6 classrooms.
Taking all the classrooms and an average of 27
per class, student capacity for elementary is
over 1,200.
– Elementary is currently at a level of 60% capacity.
Enrollment at the elementary level is such that
the district can operate two elementary schools
instead of three.
  What About Other Levels?
Enrollment will continue to decline at middle
school and high school levels over the next few
years as the low numbers trickle upward.
Enrollment at the middle school is such that we
could move 6th grade up to middle school, which
would compare with other districts in the area.
Adjustments will continue to be made each year
with staffing levels.
We will continue to take advantage of
opportunities to reduce expenses in all areas.
 Cumulative Cost of Declining Enrollment
         Foundation Year/Year   Year/Year    Cumulative   Cumulative
Year     Allowance Enrollment     Lost       Enrollment      Lost
                     Decline    Revenue       Decline      Revenue

’10-11      $7,316         54    $395,064            54      $395,064
’11-12      $7,316         28    $204,848            82      $599,912

’12-13      $7,316         54    $395,064           136      $994,976
’13-14      $7,316         35    $256,060           171    $1,251,036

                                            Total         $3,240,988
Budget Projections – 2010-11
Decline in Enrollment (54 x $.6,900)                   $372,600
Step Cost                                              $120,000
Health Insurance Increase Cost (5% increase)            $86,000
Retirement Rate Increase (1.5% increase)                $20,200
Structural Deficit from 2009-10                        $800,000
Decrease in Foundation Allowance $250 per student      $385,000
  Total Negative Adjustments                        $1,663,800
Consideration of Facility Consolidation

 Board has been informed about the issue
 Board meetings and worksessions will continue
 to communicate the issue publicly
 Plan for elementary facility consolidation at the
 end of 2009-10
 Cost savings of approximately $250,000 to close
 one elementary
 Closing one school may affect the other school
 attendance boundaries
Board Meetings/Worksessions
Will continue to review information such as
enrollment history and projections,
boundaries, building information, utilities,
mechanical systems, staffing, technology
Purpose – Communicate to the Board and
community that an elementary school
needs to be closed at the end of the 2009-
10 school year
          Potential Timeline
January – Board Meeting Presentation
February – Site Committee to review current
quality of all elementary buildings
February – On-Line Budget Survey available
February/March–Updates and information at
Board Meeting and Worksessions
March 8 – Committee reviews information to close
an elementary school building
March 22 – Board Vote on recommendation to
close an elementary
End of March– Kindergarten Registration begins
Late Spring 2010 – Transition meetings are held
Communication about the Process
Link to presentation information will be on
the Pinconning Area School's Website at
www.PASD.org
Updates at each Board meeting
On-Line Budget/Financial Survey
Presentations to staff and community
during February/March
         Strategic Goals
Strong Fiscal Foundation
Quality Extra-Curricular Programs
Facilities K-12
Quality Technology Plan
Appropriate Staffing/Professional
Development
Quality Curriculum

				
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