More districts face deficits, scramble to avoid takeover

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Capital News Service
LANSING – The number of Michigan school districts with budget deficits grew by five in the last year. Some districts mired in long-term crisis asked for emergency managers but others are making strong efforts to avoid state takeover.
Meanwhile, Gov. Rick Snyder has appointed an emergency manager for Highland Park City Schools following the school board’s failure to balance a budget deficit that increased from $6.6 to $11.3 million in one year.
Snyder said, “Over the last several weeks, I have grown increasingly concerned about the district’s ability to complete the school year without significant assistance and intervention. The welfare of the students attending Highland Park schools is our number-one priority.”
That would make it the second district run under the emergency manager law after Detroit Public Schools.
“The reason school districts have budget deficits vary between districts and all need a unique solution,” said Jan Ellis, press officer for the Department of Education.
Financially troubled districts and their boards are required to develop a deficit elimination plan, Ellis said. “The department ensures that the plans meet all legal requirements and monitors its implementations to eliminate the deficit over time.”
Currently 48 districts face a deficit, up from 43 in 2010-11.
Of 165 districts in deficit at some point over the past 21 years, 79 percent operated in the red for three years or less.
Among districts in the first year of a deficit are Galien Township School District, Bridgeport Spaulding Community School District, Mason County Eastern Schools and Flint Community Schools. Their shortfall ran from about $4,000 to $4 million.
Doug Pratt, public affairs director at the Michigan Education Association (MEA) predicted that number will increase.
“We have been cutting school budgets in the state for a decade, and without appropriate funding districts will fall into deficit, regardless of how well the management is,” he said.
The MEA is the state’s largest union of teachers and school employees.
According to Pratt, a $1 billion cut to public education aid made the problem even worse, and an emergency manager is not the best solution.
“Districts need help but the current emergency manager law goes way too far in stripping employees’ rights such as the ability to void contracts and overrule the decisions of democratically elected officials,” he said.
Several districts with long-term budget deficits made sacrifices to keep employee contracts.
For example, East Detroit Public Schools underwent a significant reduction in state and federal funding in 2010, when a budget deficit reached $8 million.
According to Superintendant Joanne Lelekatch, it is essential for the district to keep its employees.
“We closed buildings, reconfigured our elementary grade alignment, negotiated a 10 percent wage reduction from all bargaining groups, and employees also contribute 20 percent to their health care,” she said.
The Education Department approved the district’s deficit elimination plan that projects a balanced budget by 2014.
The Pontiac School District is also committed to keeping up quality education, said Erica Donerson, its communication supervisor.
“The district must cut its expenses while minimizing the impact on students and staff. Our top priority is to provide quality education and we have to keep our teachers to reach our goals,” she said.
According to Pontiac’s budget calculations for 2011-12, the deficit should be reduced from $26 to $15 million. Primary cuts include vendor contracts and administrative costs.
“Parents and local residents are strong supporters of the district,” she said. “They are involved in school fundraising, provide donations and pledge to assist us in anything they can as we deal with our budget deficit.”
According to the Education Department, the number of districts that have reduced their deficit doubled from eight to 16 in last two years.
Meanwhile, districts with small budget deficits around 5 percent are also concerned about their future and staff benefits.
The Vanderbilt Area School District in Otsego County outsourced public services to private companies, said Patti Kenyon, its business manager.
“We have to allocate some money to the state unemployment fund but hopefully will eliminate the deficit in the coming years and maintain jobs and employees benefits,” Kenyon said.
According to MEA’s Pratt, collective bargaining is the best way to work collaboratively and solve problems with deficits.
“We assist our members in working closely with the school district – and the emergency manager, where one exists – to make decisions to adjust the way we fund schools for the sake of our kids,” he said.
However, Michael Van Beek, an education expert at the Mackinac Center for Public Policy in Midland, said unionization causes fiscal constraints and lowers fiscal flexibility for the schools.
The center is a free – market oriented think tank.
“In order to reduce costs, school districts must revise their union contracts, as 85 percent of their costs are dictating by these agreements,” Van Beek said.
© 2012, Capital News Service, Michigan State University School of Journalism. Nonmembers cannot reproduce CNS articles without written permission.

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