School district finds $14.3 million budget deficit
By Lisa Brody
Birmingham Public Schools Superintendent Dr. Embekka Roberson, the evening before a board of education study session on Tuesday, March 1, sent out a letter to the school community announcing that while working on budget amendments, it was determined that the district has a $14.3 million shortfall due to a variety of factors – including an “over-levying” of residential property taxes.
The board study session, which was not televised nor recorded, was for district personnel to present an amended budget. Board of education members are scheduled to vote on that budget at their regular meeting on Tuesday, March 15.
The school board also met in closed session on Thursday, March 3, but there was no published agenda of what was to be covered. In response to a questions about the topic of the closed session, district spokesperson Anne Cron said the closed meeting was permissible according to “Open Meetings Act Section 8(h), considering material exempt from disclosure under another statute.”
In her Monday evening letter, Roberson wrote, “On June 22, 2021, BPS adopted a 2021-22 school year budget that estimated a $1.58 million shortfall. Upon assuming the role of superintendent in July 2021, the Board of Education and I immediately began a review of our school operations. Our recent work on the mid-year budget amendment process determined that the shortfall is 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.”
According to a powerpoint sent by the district and supposedly presented at the study session, the original 2021-2022 school year budget had general fund revenue at $122,471,210, creating a $1.5 million imbalance, which Roberson indicated had been budgeted for. However, reviews of the budget revealed a much wider discrepancy, with revised general fund revenue at $119,716,575, and general fund expenditures at $134,027,703 – for a shortfall 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.
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 BPS 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.
Roberson said in her letter that in January she brought in Dr. Maria Gistinger, a CPA and retired assistant superintendent of finance, to perform a thorough review and collaborate with the district's auditors from Plante Moran. She said they are looking to mitigate the impact of the “new budget reality” by seeking out one-time federal grants, conducting in-depth line-by-line reviews of current budgeted items, and seeking board approval of budget amendment of $3-$4 million which would come from district's $20 million fund balance.
“While we are making significant strides to address the current budget, there will need to be further corrective action to mitigate future budget shortfalls for the 2022-23 school year and beyond,” Roberson wrote in her letter. “We understand this is not ideal news, however it does present an opportunity to better align our priorities with our spending. Currently, we are in our strategic planning process.”
Questions which were not addressed in the letter nor in the powerpoint presentation include how long the district has been over-taxing district property owners, and by how much, as well as how an error in millage rates could have been made and not caught prior to tax bills going out. Calls to Dr. Roberson were not returned by press time, as well as calls to the Oakland County Equalization Office, which is charged with vetting and verifying the district's millage rates before tax bills are sent out each year.
The powerpoint provided by the district did indicate the board and administration would “work with treasury, the district's auditors, and attorney to review the homestead millage calculation for a more accurate levy.”
As for other next steps, the powerpoint stated the district plans to “incorporate enrollment plans and building capacity for long-term budget planning,” which may indicate some building changes or closures, as well as revising the budget process in the business department for a more “collaborate approach, complete with checkpoints and reviews along the way.”
Whether associated or not with the budget problems, according to sources, an assistant superintendent was escorted out of the building during the Tuesday board work session. When asked to confirm, Cron said school officials “do not comment on personnel matters.”