$7.1 Million Preliminary Budget Shortfall

Update: Friday, January 27, 2012

The potential shortfall has decreased to $6.2 million.

  • MCPS received the health insurance renewal information for next year.  The cost was budgeted to go up 10%, but only increased 2.5%.  This reduced the deficit by $271,335.
  • The Governor’s proposed budget includes additional funds specifically earmarked for maintaining small elementary classroom sizes and for reading intervention. These designated funds would reduce the deficit by $192,576.

These items alleviate approximately $1 million of the burden for MCPS.  There is still a gap of $6.2 million between the projected revenue for the school division and our necessary expenditures.

The major reasons for the deficit – increase in VRS contribution rate, increase in the composite index for Montgomery County, and the loss of hold-harmless clause for the composite index – have not changed.

 

Posted: Monday, January 23, 2012

The preliminary 2012-2013 operating budget for Montgomery County Public Schools has the school division operating at a 2007 funding level, with 2012 expenses. The preliminary budget includes a potential shortfall of $7.1 million.

As a part of the recent reductions, the school division has enacted the following cuts that are still in place in the current budget: - Reduction of 51 positions: 35 in previous years and 16 additional positions reduced in the superintendent’s proposed budget for 2012-2013 - Reduction of 50% of the textbook budget - Reductions ranging from 41% to 59% in the categories of supplies and equipment - Reduction of 35% in funding for field trips

The superintendent’s preliminary budget for 2012-2013 is a needs-based budget that signifies the bare minimum expenses the school division needs to maintain a quality education for K-12 students across Montgomery County.

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Why $7.1 million?

The preliminary budget deficit reflects a decrease in revenue, an increase in expenses required by the state, and a small increase in expenditures for roofs, technology and buses. The state legislature is meeting now and the outcome of the legislative session may help decrease the shortfall.

Why is there a revenue shortfall?

MCPS will lose $5.2 million in revenue based on the Governor’s Proposed Budget. Although the Governor’s Proposed Budget increases funds to schools, two-thirds of the increases are earmarked for specific purposes.

  • 1.9 million - The division will receive $1.9 million LESS from the Commonwealth of Virginia. The state has determined that Montgomery County can pay more towards education. This determination is based on the local composite index, which increased as county real estate values increased. Historically, the state has had a safety net for divisions that had this great of a change in their composite index. However, the Governor proposes to remove that safety net this year.
  • $3.3 million - Governor McDonnell has proposed a significant increase to the employer contribution rate for all employees in the Virginia Retirement System. This will cost MCPS $2.7 million. - Governor McDonnell proposed an increase to the retiree health insurance credit that will cost MCPS more than $500,000. - Governor McDonnell’s proposed budget almost doubles the group life insurance rate and will cost the division almost $140,000.

MCPS will also lose $1.2 million of federal job stimulus funds. Sixteen positions were saved in 2009 using these funds and the current proposed budget for MCPS includes a reduction of 16 full time positions.

What are the Division's increased expenses?

Due to capital and technology needs in the district, MCPS has an expenditure increase of $902,358. - Almost $350,000 in increased textbook funds to match the state increase. MCPS must match the state increase to be eligible for the funds. - An additional $150,000 for utilities costs at the new and larger elementary school facilities (Eastern Montgomery Elementary and Price’s Fork Elementary). - $250,000 to repair building roofs across the division. - $150,000 to continue implementation of the 21st Century classroom technology initiative. - $350,000 for bus replacements.

What does $7.1 million look like in MCPS?

To show the magnitude of how $7.1 million may affect the MCPS budget, here are a few examples of what $7.1 million could buy in MCPS.

  • $7.1 million = 81 new school buses
  • $7.1 million = the entire supplies and equipment budget (paper towels, cleaning supplies, bus fuel, etc.)
  • $7.1 million = 123 full-time staff positions
  • $7.1 million = an additional $0.10 increase in the real estate tax

What would make a difference?

  • A gradual phase-in of the increased employer contribution rate for the Virginia Retirement System would help ease the VRS burden on the school division and could add up to $2.7 million to the MCPS budget.
  • Reinstating the hold harmless clause for divisions that experience a significant change to their composite index could add up to $1.9 million to the MCPS budget.
  • Additional flexible funding that is not restricted to a specific use.

How can you contact the decision makers if you are concerned about the status of education funding in Virginia?

  • - Contact your Virginia legislators and ask them to make funding for education a priority for the Commonwealth.
  • - Contact your representative on the Board of Supervisors and ask him or her to keep education as a priority in Montgomery County.