Leaner Times Ahead for Farmington Schools

Farmington Public Schools Executive Director of Business Mary Reynolds doesn't want to be the bearer of bad news. But she suspects she will be early next year, when she delivers the district's amended budget to the Board of Education.

Farmington Public Schools will face the same big challenge as the rest of Michigan: Falling property values means lower decreasing tax revenues, which means less money for schools.

"One key factor we monitor is what's going on in Oakland County, and what they are watching is property values and foreclosures," Reynolds said.

The whole state looks to Oakland County as a bellwether, Reynolds said, because 19 percent of the state's taxable value is in Oakland County properties.

The news from the county is a mixed bag. County officials recently predicted a 10 percent reduction in property values for the remainder of this school year, Reynolds said.

"But they were originally expecting it to be worse. They had originally said there would be a 12 percent reduction," she said. The county is expecting a 5 percent decrease in values during the 2011-2012 school year, and a 2.5 percent decrease the year after that, she added.

Though the apparent leveling off of property values is good news, Reynolds said that she's bracing for a $1 million expense tacked onto the district's budget, because the state is likely to increase the amount of money districts have to pay into the statewide Public School Employees Retirement System.

"There's no way we could have ever forecasted that our percentage would have increased this much," she said.

For every dollar the district pays in salaries and wages, it must pay 20.66 cents to the retirement system.

"We were told in the spring it could increase by 19.41 percent next year. That would be a $1 million hit to the budget," Reynolds said. The Office of Retirement Services has not put out any information about the future, but Reynolds said it's been hinted that Farmington Public Schools will be paying 23-25 percent more.

The district's total budget for this year is $149 million; the state foundation allowance is $9,892 per pupil.

Reynolds also expects a 140-student enrollment drop next year, based on projections by Stanfred Consultants of Okemos. But the loss of students could be larger than that.

"It's hard to tell," Reynolds said, adding that Stanfred predicted Farmington Public Schools would see a 110-student reduction this year. "In reality we were down by 260."

The big question will be: How does the district adjust to the reductions in the budget?

"The big thing we're hearing about now is collaboration of services," Reynolds said. "There are districts that have combined their transportation services, for example. And Oakland Schools is looking at consolidating special education transportation services."

She stressed, however, that there have been no discussions about doing so in Farmington Public Schools.

But she added, "We haven't been able to come up with any ideas to further cut spending. We've cut so much since 2002. There are few places left to look."

Before the last budget reduction plan, the district cut a total of $22 million since 2002, she said. Then in 2009-2010, officials cut $18 million from a $162.4 million budget. That included closing four of the district's schools and eliminating 170 staff and teaching positions district-wide. Reynolds said it was the largest one-time reduction in the district's history.

The budget projections for the next few years show modest increases. But those projections flat-line wages and facilities costs like utilities.

"There are increases in benefits costs, which we have no control over, and in retirement costs," Reynolds said.

Reynolds will present the amended 2010-2011 budget in January. At a May study session, the board will discuss the proposed budget for next year. There will be a budget hearing in June, and the board must adopt the 2011-2012 budget by June 21.