Muskegon Public Schools To Slip Into Deficit By End of School Year

Andrew Trzaska | April 16, 2013

Muskegon Public Schools is set to slip into a deficit by the end of the 2013 fiscal year.

According to district superintendent Jon Felske, the district is looking at a $2.5 million deficit by June, which would put it on a list of schools watched by the Michigan Department of Education (MDE).

Muskegon Public Schools would be designated as a Category 4 school as defined by the MDE.  This category includes schools that started the year without a deficit but are projected to fall into one by the end of June.

Currently 49 school districts currently carry a negative fund balance, which includes. Three more are identified by the MDE as moving into a deficit in the coming months, bringing the total to 52. While a majority of the schools on the list are expected to their financial standing this year, the list is much longer than it was only a few years ago.

“We’re about to become the fifty-third,” said Felske.

The superintendent described a “lengthy” meeting he had with his board yesterday explaining the matter. Felske indicated he would be contacting the Michigan Department of Education in the next week to formally notify them of the district’s financial situation.

This will start a process that in the end will involve the district submitting a deficit elimination plan (DEP) to the MDE, which essentially lays out how the district plans to escape its financial standing in the coming year.  Within a month of alerting the state, the MDE will have a meeting with Felske and others from the district on what to put into the deficit elimination plan, and some time after that the district will submit their plan, likely in the summer.

“We are on are process, and we will begin working through the steps,” said Felske.

Up until spring of 2012, Muskegon Heights Public schools went through the deficit elimination plan process for multiple years before asking the state for an emergency manager to right its finances.

Muskegon’s coming deficit is not projected to be near as bad as the one Muskegon Heights had in its last few years.  Muskegon Heights had a $8.47 million deficit at the end of the 2011 fiscal year, and an $11.78 million deficit by the end of June 2012.

Felske’s comments were brief at Tuesday’s meeting, but he invited those from the community at the meeting to approach him or to contact his office for more information.

He noted after the meeting that all collective bargaining unit negotiations would continue through the process of submitting the plan, except for the district’s custodial unit, which only recently approved a 3-year contract.  Last week, the district announced plans to pink-slip all teachers at the end of the school year, something that has happened before in the past several years.  The difference this year is that decisions to hire back teachers will rest on performance evaluations, not seniority.

Felske also noted on Tuesday that no building closures are currently being considered for the coming year.

Mayoral candidate Zawdie Abiade spoke on the deficit, placing his trust in the existing board to work through this year’s budget challenges.

“I’m proud of our board, and I encourage you to stay strong,” said Abiade. “I’m encouraged by you. When the negativity seems to extend itself, I hope our laughter and your joy would continue to stand out.”

Only two other districts in a one-county radius are on the list.  White Cloud is a Category 2 on the list, meaning its deficit numbers are expected to improve by the end of the school year. Muskegon Heights Public Schools is listed as a category 1, indicating it is projected to emerge from a deficit by June 30, 2013.

According to a memorandum from the State Board of Education, indicators that often signal future deficits include increased employee costs, declining enrollment, a declining fund balance, more short term borrowing and other factors.

Andrew Trzaska

103.7 “The Beat” – local government beat reporter and political analyst