VESTABURG — The Vestaburg Community Schools Board of Education heard some good news about the district’s finances at their June 29 meeting before voting to approve several budgets.
Board members, staff and guests met via Zoom for a budget hearing before the board meeting.
The board approved the final amended general fund budget for 2019-2020, with revenues of $8,092,174 and expenditures of $8,006,708.
Superintendent Brandon Hubbard called the budget “the worst-case scenario.”
Hubbard noted that, even after factoring in a potential proration by the state of $650 per student, bringing funding to $7,411 per student, the 2019-2020 budget ended with a surplus of $85,466, which will be added to the general fund balance.
“Even if (the state) did prorate us, this is where we would be coming out: with the surplus,” Hubbard said.
The fund balance at the end of the 2019-2020 school year, with the surplus, was $577,704, or 7.22%, which is “way better than where we thought we would be at,” Hubbard said.
If the state does not impose the $650 per student cut, $550,000 would remain in the general fund, bringing the fund equity to more than 15%, he added.
“Right now we’re really hoping that the federal (government) is going to step in and eliminate some of that $650 reduction,” Hubbard said.
Even though the district continued to pay its employees through the shut-down, there were savings in other areas, such as transportation, day-to-day custodial work, and from not having spring sports.
“What we really tried to do was to maximize that to the best of our ability to offset (funding) cuts,” said Hubbard.
Student enrollment for the district’s alternative education program, which is a blended virtual site that runs throughout the state, also helped offset costs and stabilized the budget, he said.
Board members also approved the proposed 2020-2021 general fund budget, which, Hubbard said, is only a “best guess,” because the state does not adopt its budget until September.
The proposed budget assumes $8,100,922 in revenue and $8,177,024 in expenditures, projecting a deficit of $76,102.
“Anything between a negative $50,000 and $50,000 is almost considered a balanced budget going in,” Hubbard noted.
In building the budget, Hubbard said he was “conservative” on student enrollment numbers — 600 and 250 in alternative education, both down slightly from the last school year’s count — and on other revenue sources, but expenses reflected a full year of school. He also included the $650 per student reduction in funding from the state for this second fiscal year.
“Based on all that and the cuts, it’s about a break-even over the two-year cycle, which was phenomenal,” said Hubbard. “Our goal is to just watch it very closely and hopefully to continue on the path where we don’t have to make a lot of cuts.”
Early retirements offered
One “proactive and preventative” cost-savings measure proposed in the 2020-2021 budget was an incentive for early retirement. The Finance Committee recommended that the district offer the incentive of $15,000 for this one year only, which “is on the higher end” compared to other districts, said Hubbard. The deadline is July 10.
“We thought, if someone takes it, we save money and it gives us some flexibility within our staffing if we were to get the full cuts or encounter some budgetary issues,” he said.
Board member Brian Zinn noted that, while it is “great” to offer the opportunity, it is not something that Vestaburg will utilize to set a precedent.
The board approved the committee’s recommendation to offer the early retirement incentive for the 2020-2021 year only.
Food service budget
The board also approved the proposed 2020-2021 food service budget, with projected revenues of $378,225, expenses of $341,260, and excess revenue over expenditures of $36,965.
Food service ended the 2019-2020 year better than expected, thanks to an increase of more than 5,000 breakfasts and more than 8,000 lunches served to students when in-person school was open; and 55,014 meals served after school closed in March, reaching 80% of students, according to Hubbard.
The district adopted the Community Eligibility Provision (CEP), which allows schools and school districts in low-income areas to serve breakfast and lunch at no cost to all enrolled students without collecting individual household applications. Schools are then reimbursed by the federal government on a formula for the free meals. This is the second year Vestaburg has participated in CEP.
“We surpassed what we thought we would (serve) … so that budget came in better than what we thought,” Hubbard said. “Our revenue went way up, beyond what we expected, from $292,000 to over $400,000 in revenue. Expenditures were up as well, but not quite as much.”
The additional $50,000 in revenue over expenses will put the food service fund balance at $123,280, or 35.2%, which will require a spending plan, Hubbard said. The district hasn’t had one for a few years.
“We’re only supposed to keep about three months of expenditures in fund balance so we’re putting money back into programs,” he added. “We have a relatively new kitchen, so we haven’t had a huge need for equipment. When it comes time to spend, (Food Service Director) Laura (Kimball) is going to be challenged with what can she do creatively to offer new things and do some different things.”
Debt retirement budget
The district’s 2015 debt retirement budget also was approved by the school board. The district currently has four series of debt. Two existing millages, one from 2005 and the other from 2009, have been refinanced, which will save the district more than $2 million over 20 years, according to Hubbard. Voters approved a millage in 2019.
“The budgets are just to show we’re not overspending what we’re expected to bring in,” said Hubbard.
Board members also approved a consent agenda, which included a contract renewal for Karen Gostomski, preschool coordinator; and two-year rolling contracts for administrators Jennifer Warner-Leja, middle school and high school principal, Emily Groulx, special education director and elementary principal, Kim Simpson, elementary dean of students, and Hubbard.
Also approved in the consent agenda was the hiring of Troy Reedy as the secondary dean of students and athletic director. Most recently Reedy was with Rockford Public Schools, Warner-Leja told the board and has a “significant amount” of teaching experience at the high school and middle school, coaching and leadership experience among his colleagues.
“We had a very competitive pool, but Troy really rose to the top when we did every single round,” she said. “We are excited that he accepted the position we offered him.”
The board also approved borrowing $2 million for cash flow purposes in light of the possible cuts of $650 per student. While overall the budgets for this year and next year are “in pretty darn good shape,” Hubbard said, the district will not receive funding from the state until after Oct. 1, so it will “burn through” savings to pay salaries, said Hubbard.
“The irony is if we don’t have cuts, all that money comes back in and, when we pay this off next year, we could be in a really good spot,” he said. “But we have to do this to make sure we have the cash flow if we do have the cuts or the prorations.”
In the past, the district has borrowed from $900,000 to “a little over $1 million.
“With student cuts of $550,000 each year (2019-2020 and 2020-2021), that’s your $2 million,” Hubbard added.
Zinn gave kudos to Hubbard and everyone involved in the district’s finances.
“Tons of large and small districts in the central Michigan area are making a lot of tough choices right now,” he said. “Everybody involved at Vestaburg and our community should applaud each other because we’ve done a great job. Everyone pitched in to do that.”
Hubbard told board members he is still waiting to see what the requirements will be for the fall opening of school. While opening will probably be done by region, a lot depends on the numbers of coronavirus cases going up and down and “a lot can change in a month and a half,” he said.
“The more we can abide by the social distancing, the more we can abide by the masks, the more we can try to decrease the numbers of COVID infections, the better the chance we have of being in school come August and September,” Hubbard said. “The more we can encourage our community, and all the communities around us, to follow those guidelines, the better chance we have.”
The school board has an organizational meeting set for 6 p.m. July 20.