District to get extra $197 per student
October 06, 2010 - The good news is Oxford Schools is getting more money.
The bad news is it's a one-shot deal for this year only.
The really bad news is a good chunk of this extra money is going to be used to pay for retirees.
The horrible news is the state still hasn't fixed Michigan's overall school funding problem and there's no more federal money after this to fill the gaps.
Last week, the schools learned they're going to receive an additional $197 per student for the 2010-11 year, which translates into a total of $895,739 for the district.
"It's $900,000 that we had no idea we were going to receive when the budget was put together," said Tim Loock, assistant superintendent for business and finance. "So, obviously it's good news from that standpoint. It will help with any unexpected costs that we might incur this year. We do have more teachers than we originally thought based on program needs."
This additional money's coming from the federal Education Jobs Fund. A total of $316 million was given to Michigan to be disbursed to school districts.
Oxford's receiving an extra $154 per student, plus another $43 per pupil because the district's foundation allowance is so low.
"The lower the foundation allowance, the higher this additional allotment is," Loock said. "Since our foundation allowance is near the bottom, we're going to get another $43 per student, which is $195,516."
The extra $197 per student will basically bring Oxford's foundation allowance up to $7,600 per pupil. When and how Oxford will receive the money is unknown at this point. "We don't have any direction yet on how we're going to receive the money (and) what kind of reporting requirements are going to be put upon us," Loock said. "All we know is the state applied for the funds and the funds were granted statewide."
Unfortunately, Loock noted this money isn't a "windfall" with no new expenses attached because last week, the state also announced that the retirement rate each district pays is going to increase by 1.25 percent to 20.66 percent on Nov. 1.
That means for every dollar the schools expend in payroll, the district must pay 20.66 cents to the Michigan Public School Employee Retirement System.
This increase, which will equal approximately $250,000 for Oxford, was not budgeted for and was a surprise to school districts everywhere.
"There's one big cost that we didn't know we were going to have," Loock said.
He explained that everyone knew the retirement rate was going to increase from 16.94 to 19.41 percent on Oct. 1 and budgeted accordingly.
Usually, there's only one retirement rate adjustment per school year. A second rate hike in the same year is unheard of.
"They're doing something with the retirement rate that I've never seen happen before," Loock said. "This is the first time they've jumped the rate in the middle of things."
The reason for the second rate increase can be traced back to the early retirement incentive the state offered public education employees to end their careers at the end of the last school year.
"Essentially, what they're saying is they offered an incentive last year for people to retire and now we've got to pay for it," Loock said. "Many of us wondered if there was going to be some kind of piper to pay due to that retirement incentive they offered to encourage people to leave early. Well, here it comes."
Loock pointed out that while this extra federal money is only for this year, the retirement costs are "with us forever."
Although the extra $197 per student is good news for this year, the assistant superintendent noted it's a "really short-term" fix because when the 2011-12 school year rolls around, there won't be any more federal dollars to help districts make up for shortfalls in state funding.
"Whatever hole it's plugging this year, it's gone next year," Loock said. "When it's gone, it's gone. There's a big cliff out there."
That cliff is the 2011-12 school year.
Loock said "it's hard to imagine" the foundation allowance being reduced by hundreds of dollars, "but unless they (the state) comes up with some kind of fix, that's what potentially could happen."
Many districts will undoubtedly try to conserve as much of this last bit of federal funding as they possibly can to use it as a "cushion" for next year, but between the increased retirement costs and other unforeseen expenses, Oxford's not going to be able to squirrel it all away, according to Loock.
"At the end of the day, will our fund balance go up $900,000 because of this? I wouldn't say that," he said.
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.