School board approves crisis budget amendment
By Lisa Brody
With hopes of beginning to deal with the $14.3 million budget shortfall discovered earlier this year, on Tuesday, March 15, the Birmingham Public Schools Board of Education heard a presentation by Dr. Maria Gistinger, retired assistant superintendent of finance on short and long-term steps the district should take to address budget inaccuracies, shortfalls and wrong millage calculations, and board members unanimously approved a 2021–2022 fiscal year general appropriations budget act to balance the budget.
Gistinger was hired back for the rest of the school year in January by superintendent Dr. Embekka Roberson to perform a thorough review of district finances and collaborate with the district's auditors from Plante Moran after Roberson learned a projected $1.58 million budget shortfall was “actually projected to be $14.3 million due to discrepancies in both revenue and expenditure estimates, including underestimations of salary and retirement calculations for the 2021-22 school year, an overestimation of student enrollment, and an over-levying of property taxes which will result in a credit to taxpayers.
Embekka announced at the meeting that Jim Larson-Shidler, who had been on leave as assistant superintendent of business services since January 2022, submitted his resignation request on March 8. Rather than pursuing other avenues of redress, she recommended to the board he be paid through the end of his contract, at the end of the school year, and his resignation was approved by the board.
Roberson read a statement before introducing Gistinger, which read in part: “Looking ahead, we are going through our budget line by line, looking for ways to increase operating efficiencies, expand revenue-generating options and seek additional funding sources. We are also implementing improved protocols and practices to ensure this does not occur again. This includes more frequent budget reviews from additional personnel in the finance department and presenting monthly financial statements to the board for consideration.
“While the 2021-2022 budget was approved and the miscalculations made before I became superintendent, I am committed to fixing this by working with staff, the board, students, families and the whole community. Throughout this process, we will be seeking input from all stakeholders to help ensure the budget reflects our priorities and that decisions will be made in a way that minimizes impact on our students. Despite the tough choices and hard decisions that lie ahead, I am confident we can and will emerge stronger by working together and remaining united around our shared goal of providing a world-class education to our students.”
She said they had been able to balance this current school year's budget using one-time federal grants along with $3.49 million of the district's $20 million fund balance.
In actuality, as Gistinger later made clear upon board questions – the district has not yet been approved for those grants, but merely anticipates receiving the grant money for which they are still applying.
“Not every school district can apply for this funding. We have a very solvent school district.” she stated, while emphasizing that they are one-time funding grants, and the board will have to adjust for the 2022-2023 school year. “If we're not successful in receiving it, the board would have no choice but to use your fund balance (for the remaining 11 million outstanding shortfall).”
Gistinger said while she and others have been going through the budget and financials line by line, where significant discrepancies were revealed, reviews of the budget revealed a much wider discrepancy than originally expected, with revised general fund revenue at $119,716,575, and general fund expenditures at $134,027,703 – for a negative difference of $14,311,128.
There is a $11.4 million discrepancy in general fund expenditures between the original 2021-2022 budget, which was projected at $122,602,855, versus the amended 2021-2022 budget, at $134,027,703. Salary differential was $3.5 million; retirement, $3 million difference; health insurance and other benefits, over $1.2 million difference; and $1.7 million in other fees, along with a variety of other adjustments.
“I discovered a fund balance had been calculated incorrectly for a number of years,” she said.
On the other hand, the amended budget indicates over $3.3 million less in revenue than in the original budget, with almost $5 million less from Proposal A obligation, which is the minimum per pupil funding allowance from the state; $1.2 million less in property taxes; $400,000 less in the public school employees retirement fund; and $700,000 less in per pupil increases.
Enrollment in the district has declined from 8,375 students in the 2012-2013 school year to 7,283 students in the 2021-2022 school year. However, the district received funding for 7,297 students for this school year, an excess of 545 students. “BPS has been in a state of decline for many years, and that will need to be addressed by the administration,” she said.
“Moving forward, the goal is to create an efficient education system without sacrificing opportunities for students,” she said, which they are doing by enacting a zero-based budgeting approach, and recommending the district work with the county treasury and the district's auditors.
As for the improperly calculated homestead property tax millage, she said they are recommending deferring the money collected for next year as if it was already collected from residents, and they will be addressing a new homestead property tax millage going forward.
In the long term, Gistinger said the district needs to incorporate enrollment plans and building capacity with their budget planning, and revise the budget process along with the business department for a more accurate result.
Board members voted 5-0 to approve the budget amendment for the current school year, with board members Kimberly Whitman and Adrienne Young absent.