Swanton school board says forecast murky after 2011

Economic woes spur uncertainty

By DAVID J. COEHRS

Enterprise Staff Writer

SWANTON - Although the Swanton school board approved the district's five-year forecast at a meeting Oct. 20, the numbers beyond Fiscal Year 2011 don't look sunny.

Because the forecast is mandated by the state, it's prepared and sent. But with unpredictable factors like revenue, continued cuts in state aid and price increases, it's a challenge for any board treasurer to gauge future finances, Interim Superintendent Russ Griggs said.

"Most input data for anything past the first two years is highly questionable at best," he said. "You have to guess changes that may be implemented by legislators, fuel prices and insurance costs. Beyond year two I don't think it's a reliable document."

Board Treasurer Cheryl Swisher said an $8.25 million carryover from the 2008-09 fiscal year will help keep the school district afloat for the next two years. But because of possible changes in state funding, as of Fiscal Year 2012 all bets are off.

What concerns Swisher most is the possible loss of state transitional aid, distributed to school districts to offset changes instituted last year in the state funding formula. Swanton schools presently receive $1.4 million in transitional aid annually, an amount figured into the five-year forecast.

Because the state hasn't guaranteed transitional aid beyond 2011, the forecast could be affected by that amount from 2012 to 2014, Swisher said.

"If the funding formula would have stayed the way it was, our district would have been positive through 2013," she said.

State funding for 2012 is also unscertain because fiscal stabilization funds - federal money the state allocates to offset the district's budget - may no longer be available. The district received $273,693 in stabilization funds for the current school year.

Swisher has forecasted the same amount for next school year, and is hopeful it may increase slightly.

The school district received $3.9 million in state aid this school year, a $200,000 decrease from the previous year. The current general fund operations budget is approximately $13 million.

Swanton schools will begin deficit spending in Fiscal Year 2011 by nearly $1 million. That figure will rise to $2.6 million in 2012, $3.8 million in 2013 and $5.5 million in 2014.

The district's carryover will help to weather those increases, Swisher said. But a loss of 216 students over the past five years and an increase in delinquent local taxes will help the slide continue. Additionally, a lower .75 percent income tax approved by voters in November 2008 will take effect in January 2010, dropping revenues another $900,000.

"It mainly has to do with decreases in revenue due to economic factors," Swisher said. "The board was very conscious about expenditures, and scrutinizing every purchase and every employment, and making sure they were in line. They tried to run the school district as a business."

Given the circumstances, it's as good a forecast as can be made, said Dennis Heban, board vice president. He said the revamped school board after November elections will have to find ways to reduce deficit spending.

"If they can do it in smaller steps rather than massive cuts it reduces the impact," Heban said.

Despite the dreary forecast, Griggs considers the district on solid ground as compared to some neighboring districts.

"I'd say the Swanton schools are actually above average in terms of financial conditions. Other districts are in more dire straits," he said.

Still, the newly-appointed school board members will have their work cut out for them, Swisher said.

"They're going to have to make a decision how to increase revenues or how to lower expenses," she said.