TRAVERSE CITY — Traverse City Area Public Schools officials forecast an $800,000 shortfall in the district’s 2013-14 budget.
If the prediction proves accurate it will mark the ninth time in 10 years the 10,000-student district closed a budget gap with fund equity, which totaled about $6.7 million at the end of the 2012-13 school year. The 2013-14 predicted shortfall includes a $500,000 structural shortfall.
TCAPS Chief Financial Officer Paul Soma said the district can’t spend its cash reserves much longer. The TCAPS fund balance is already well below the Board of Education’s aim of about 10 percent of the district’s $85 million budget.
There’s some hope state officials or other funding sources will provide more revenue to local districts in fiscal year 2014-15.
“However, if that doesn’t come to fruition we will be looking at making those structural changes with the 2015 school year,” Soma said.
Soma outlined the 2013-14 budget to TCAPS Board of Education members during a public hearing on Monday. The board adopted the budget in a unanimous vote after the hearing.
TCAPS board member Gary Appel called the budget “lean” but “healthy,” especially in light of 55 local districts in deficit and another 62 in fiscal distress across Michigan.
“We’re living within our means, but it’s a very tight budget,” Appel said.
TCAPS’ 2013-14 budget
contains about $750,000 in new structural costs, including $250,000 in new retirement costs.
The budget also lists roughly $580,000 in structural reductions, with $325,000 in reduced administrative and support costs, and about $250,000 in reduced building support costs.
Soma devoted part of his presentation to retirement costs. State officials recently created a subsidy intended to cap local districts’ unfunded pension costs.
TCAPS will receive an additional $2.4 million from the state to that end during the 2013-14 school year, and TCAPS will redirect the cap money directly to the Michigan Public School Employees’ Retirement System.
Soma in a memo called capping the retirement system a “misnomer at best.” The cap funds come from the State School Aid Act, the same pool of money used to provide funding increases to local districts.
”In other words the cap is being paid for by schools and is therefore not creating ‘new’ revenues for school operations,” Soma’s memo stated.
TCAPS retirement costs skyrocketed from roughly $800 per pupil in 2009 to an estimated $1,400 per pupil in 2014.
In a positive note Soma said TCAPS will receive an additional $760,000 in foundational allowance revenue, about $75 per pupil, from the state.