Traverse City Record-Eagle

May 27, 2013

More local officials eye banked TBAISD cash

Traverse City Record-Eagle

---- — TRAVERSE CITY — More than a dozen local school boards in the Grand Traverse region gave figurative nods of approval to a Traverse Bay Area Intermediate School District budget, but local board members are still waiting to see if the ISD will release some of its tens of millions of dollars in cash reserves.

The boards of education from Traverse City Area Public Schools and Leland Public School broke from the pack this month when they rejected the TBAISD’s $8.9-million general education budget proposal in displays of public opposition to the accumulation of roughly $35 million in several operation and capital project funds.

Other local districts approved the TBAISD proposal in unanimous or near-unanimous votes.

The Northport Public School Board voted 5-1 in favor of the TBAISD budget proposal, but Northport school board President Thomas Wetherbee said his board harbors concerns about TBAISD’s swelling cash stash.

”The reason for the opposition is we are a donor district here,” Wetherbee said. “We send a lot more to the ISD than we receive in services.”

Nancy Peterson, the Northport board member who cast the dissenting vote, did not return a call for comment.

The intermediate district operates with a $60 million annual budget.

Roughly $8 million of the overall budget is tied to vocational education and funds TBAISD’s Career-Tech Center. The majority of TBAISD’s yearly budget — about $42 million — is tied to a special education fund.

Large portions of each of the three funding pools are derived from local tax millages. Cash reserves in the three pools and several capital project funds total roughly $35 million.

Whetherbee said the ISD needs to keep a healthy amount of cash on hand. But TBAISD is building up cash reserves in part because it collects more from Northport through local taxes than it provides to the town’s school district in services.

“Like most organizations, it gets to be like an empire and it’s hard to move in the other direction,” Whetherbee said.

TBAISD officials in recent weeks said they will at least consider releasing more money to member districts.

TBAISD Board of Education members will meet Thursday and consider recommendations from a committee of local superintendents and TBAISD officials for spending some of the cash reserves.

Officials from many local districts cited the creation of the committee as a step in the right direction, and said it partially influenced their boards’ approval of the general education budget proposal.

Suttons Bay Public Schools’ board approved the budget proposal, but decided to send a letter to ISD board members about their organization’s cash reserves.

“They wanted to make the point that they support the idea of spending down some of that fund balance,” Suttons Bay Superintendent Mike Murray said.

Kalkaska Public Schools Superintendent Lee Sandy served on the TBAISD committee. Committee members considered how the ISD can maintain a healthy fund balance while drawing down its cash reserves to a predetermined level over a five-year period.

Sandy said such an ISD policy would help local districts, but only to a point.

“It will help our budget a little, but it can only help for so long before it ends,” Sandy said. “It doesn’t take long to get rid of it, in terms of excess money.”

TBAISD Superintendent Mike Hill attributed the cash reserves to a combination of funding and budgetary factors unique to intermediate school districts, as well as fiscal responsibility.

Healthy fund balances are necessary in order to afford capital projects at the ISD’s career tech center and its 13 center-based special education facilities without competing with local districts for capital millages.

TBAISD also reduced its overall costs in recent years through several line-item reductions, including not replacing retirees, eliminating some career tech programs and seeking concessions during collective bargaining.

”It’s our job to look three, five and seven years down the line,” Hill said. “I would say it’s fiscal responsibility. We’ve reduced line items, we’ve not replaced staff and at the same time we’ve tried to maintain innovation.”