Emergency declaration first step toward facing district problems

‘I don’t know that anyone in the community thought it was a big deal. Now they do. Now we can work it out.’ — Supt. David Peden, Southgate Community School District

Sunday Times Newspapers

SOUTHGATE — It’s official. The Southgate Community School District is in a state of financial emergency.

However, it’s also nothing new, and officials have been preparing for it for some time.

“It doesn’t mean what the whole world thinks it means,” Supt. David Peden said of Tuesday’s official declaration by the Board of Education. “To the rest of the world it means we’re in line to be the next Detroit. But that just isn’t the case.”

Based on currently projected state funding reductions of $268 per pupil, the district is facing a $750,000 deficit in the current fiscal year and could be looking at a $2.25 million shortfall in its estimated $47 million 2010-11 budget, which starts July 1. However, that situation has loomed since October, Peden said, because of cuts in state funding that were announced back then.

Since that time, he said, officials have been making audio-visual presentations to residents and to the board about “horrific” cuts that may have to be made to balance the budget, including layoffs and reductions in bus service. Peden said officials have been upfront about the pending financial difficulties, which also are partly due to declining property values, and therefore, tax revenue.

Yet somehow, he said, some residents didn’t seem to be getting the message.

“Then we called it a financial emergency and, wham!” Peden said. “I don’t know that anyone in the community thought it was a big deal. “Now they do. Now we can work it out.”

Officials “wanted to get everyone’s attention” by declaring the emergency, he said. With that accomplished, they now will begin getting together starting Tuesday with representatives of the district’s seven unions “just to chat.” The represented groups include administrators; teachers; custodians, bus drivers and cooks (together in one unit); regular education paraprofessionals (one unit); and two units for special education paraprofessionals.

Tuesday’s meeting served as further proof that many residents weren’t getting the message clearly, Peden said, as many who attended thought the board was going to announce cuts that night.

But before any further reductions are made, he said, officials will conduct a lot of community meetings with parent-teacher organizations and town halls in large venues such as high school or middle school auditoriums to give residents a chance to see what’s being planned and to be heard. Those meetings are expected to start late next month or in early March, well before a final vote is taken.

Some of the biggest reductions won’t take place until next fall, so it could be May or later before the vote comes up, though Peden’s goal is to have it wrapped up in May.

He was quick to point out, however, that a lot can happen between now and then, including possible changes at the state level that could improve Southgate’s situation.

State Senate Majority Leader Mike Bishop (R-Rochester) last week put forth proposals for all state public employees, including a 5 percent salary reduction and contributing 20 percent of their health insurance premiums.

“Our board would have voted for that,” Peden said. “It would have taken care of 75 to 80 percent of our problem.”

Employee health insurance contributions would save the district over $1 million, he said and the 5 percent cut would save almost another million.

The Michigan budget presentation is expected Feb. 1, following Gov. Jennifer Granholm’s State of the State speech Feb. 3.

In the meantime, the two biggest local lightning rods among potential cuts are transportation and privatizing custodial services, which if made could save the district $500,000 each in the first year, he said. The number jumps by “quite a bit” for custodial savings in the second year, he said, to around $900,000, because of costs for legal fees, severance and unemployment in the first year.

Neither cut is popular with residents, Peden said, and it’s a sentiment that officials share.

“The board’s not excited, I’m not excited by having consider things like this,” he said. “But we’re charged with getting the budget balanced. That’s our job, and there’s nothing else we can do.”

Other districts and municipalities are facing similar financial hardships, which Peden said he believes eventually will be handled.

“It’s going to be painful for us, but it’ll be painful for everybody,” he said. “But we’ll get it turned around and move forward.”