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Poland schools face challenging financial outlook
Financial forecast projects $7.4M deficit by 2021
POLAND
Faced with a worrisome financial outlook, school district officials are looking at ways to stem the tide of the district’s deficit-spending trend.
The school board recently approved a five-year financial forecast that again shows a widening gap between the district’s spending and its revenue.
This fiscal year, for example, expenditures are projected to exceed revenue by $508,962. By fiscal year 2019, the district is projected to have a negative fund balance. By fiscal year 2021, the deficit is projected to widen to $7,485,000.
“The fact of the matter is, it’s a difficult situation,” said school board President James Lavorini. “We are a school district whose enrollment is declining. In addition, we have no new construction in Poland. There’s no new money coming in because of building. And it looks like we’re going to lose $270,000 per year from the state.”
The five-year forecasts school districts must submit to the state twice per year project expected general-fund revenues, expenditures and fund balances.
According to the forecast Poland submitted in May for fiscal years 2017-21, real-estate taxes provide nearly 60 percent of the district’s revenue and state funding provides approximately 26 percent. On the expenditure side, personnel services and employees’ retirement/insurance benefits comprise about 71 percent of spending. The next-biggest line item is purchased services, about 22 percent of spending this fiscal year.
Poland’s deficit-spending trend started in fiscal year 2016, when the school district spent $758,801 more than it brought in. School officials say several factors contributed to the problem.
Among them is declining enrollment. One report conducted as part of a facilities assessment by the state a few years ago indicated enrollment dropped by 469 students between 2002 and 2015, with that trend expected to continue.
“The hardest part is, with the state, we’re at their mercy,” said Treasurer Janet Muntean. “The money we receive from the state is based on enrollment, so as enrollment declines,” so does state funding.
Also, the proposed biennial budget now being considered by the state Legislature likely will feature cuts to school funding. Muntean reported to the board she expects the district will receive $270,000 less from the state each of the next two fiscal years.
“We can’t afford any state loss, so it’s significant for us,” said Muntean.
The school system’s enrollment issue also poses an operational challenge, officials have said for several years.
“Most of it comes down to what it takes to keep the buildings operational. Those costs have skyrocketed over the years,” said Muntean.
Toward that end, district leaders implemented a redistricting plan two years ago to reduce the number of buildings in use.
“It’s too many buildings for a district this size. Between trying to right-size our facilities and also then in turn right-size the staff-to-student ratio, those are the two primary things we’re working on,” Lavorini said.
District officials are attempting to reduce staffing through attrition, but Lavorini acknowledged that won’t be enough to fix the financial situation. He said, however, there are no plans to cut staff (although officials are looking at the possibility of reducing noncontracted support staff such as tutors).
“We can’t cut that many teachers. That would mean cutting 18 to 20 teachers,” Lavorini said. “We need to look at what’s most important: Our kids, and the services that we’re providing them, the academic programs. We’re not just going to cut and be in a situation where academic programs would suffer.”
The board does not have any formal plans at this time to ask taxpayers for additional levy money.
As for how to close the deficit without taking those types of steps, officials are looking at options, Lavorini said.
“That is the issue,” he said.