District remains ‘on track’ to erase budget deficit

Sunday Times Newspapers

SOUTHGATE – Being placed on a state list of school districts in danger of financial crisis wasn’t a surprise to Southgate Community Schools Supt. Leslie Hainrihar.

She understood that new reporting requirements for deficit-plagued districts would include Southgate, but remains confident that any remaining red ink will soon be erased.

“We’re still on track to get out of deficit,” Hainrihar said. “The Michigan Department of Treasury accepted our (plan) and they know we’ll be out of debt by the end of the fiscal year.”

It’s been five years since school officials crafted a deficit-elimination plan after years of declining enrollment, reduced state funding and internal communication issues combined for an estimated $5 million budget deficit.

Last year the state legislature passed an “early warning” bill which required districts entering a sixth year of debt to report to state treasury officials. Southgate was among 16 districts in the state that has been in deficit for more than five years. Five districts in Michigan are currently under state emergency management.

For the current fiscal year the district approved a budget of about $42 million, and expects to satisfy the remaining $700,000 left of its debts. Last year more than $1.5 million was paid to lessen its budget deficit, and school officials are optimistic that the worst is behind them.

Unlike emergency management for deficit-ridden municipalities, Hainrihar said state oversight simply requires districts in a deficit budget – those with a fund balance of less than 5 percent – provide monthly status reports to state officials.

Hainrihar said expectations remain positive that the 2015-16 academic year will end with Southgate having erased its deficit, the conclusion of a process that in recent years has included staff layoffs and the closing of three buildings.
The difficult decisions are likely in the past, Hainrihar said.

“We’re are at or close to capacity in our buildings,” Hainrihar said.

This month’s “count day” of student population is expected to reveal a slight decline in attendance – as has been the case in recent years – a trend that Hainrihar said will soon stabilize.

“We’ll continue to decline for the next couple of years, but at a much slower rate,” Hainrihar said. “We spent last year and this getting out of debt through employee concessions, which end at the end of this school year.”

Rather than wonder if buildings will be closed, Hainrihar said the district has high hopes for voter approval of a bond in November that would provide $20 million for facility upgrades and improvements.

“Part of that was assuring the state that we were operating at or above 85 percent capacity rate, which we are,” Hainrihar said. “Now we’re able to watch and see what kind of district we’ll be.”

(James Mitchell can be reached at jmitchell@bewickpublications.com.)