Updated FAQ's
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Frequently Asked Questions - Updated

Frequently Asked Questions - Updated

I thought Superintendent Graff said this deficit was getting cleared up last year. Why are we facing this again?

We made difficult one-time cuts last year, but didn’t change ongoing costs, so last year’s $16.5 million deficit will likely continue this year. The inflationary costs of annual salary increases will be an estimated $10 million. And then the increases in benefits are estimated to come in at around $7 million. Other inflationary costs are not yet included, so a $33 million deficit is projected not definite. It could go up or down.

I think supporting our students and teachers is more important than balancing the budget. We’ve had a deficit for a number of years, so why does it matter now?

MPS’s reserves for the past seven years have been healthy enough to overcome deficits, and because we knew we had this money available, significant funding changes were not made at that time. Over the course of those seven years, our reserves have decreased from more than $122 million to about $42 million now. $42 million may sound like a lot of money, but that’s just 6.8% of the district’s operating budget and doesn’t account for this year’s estimated $16 million deficit. According to our Board of Education policy, MPS should keep reserves (also known as its Fund Balance) at around 8%. Another year of accessing the Fund Balance would bring it down even further below that 8% minimum. For this reason, our Fund Balance is no longer an option for balancing our budget.

I see that even if you implement all your recommended budget reductions, you’ll still have a $6 million gap. How to do you propose to close that gap?

More than 80% of the MPS budget is dedicated to paying the almost 7,000 MPS employees. MPS leadership has worked hard to identify cost-reducing options that do not eliminate jobs. Once those options have been exhausted, layoffs are the only remaining possibilities.

Will teachers be laid off because of the reduction in time allocation to schools?

Yes, possibly. Every school’s needs will be different. If a school does not now offer seven periods, they may need fewer teachers at their school. In some cases, teachers will be moved to other assignments. In other cases, they may be laid off.

I’ve heard a lot of your budget suggestions, like changing from a seven period day to a size period day or raising class sizes, are actually about cutting people. Is that true?

MPS worked very hard to recommend budget reductions that minimize the need to layoff staff. Reducing the time allocations to schools, however, may very well result in layoffs in some schools. Every school’s needs will be different. Some schools may have other positions for those teachers and other schools may end up laying off those teachers.

Staff reductions are likely no matter what reductions are taken given the fact that MPS has recommended $27 million in budget reductions, but its budget deficit is $33 million. That leaves another $6 million that will need to be found, and staff reductions are the most likely source.

Do we have to pay back the deficit?

A budget deficit means that MPS expenses are greater than incoming revenues. We don’t “pay back” a deficit. The only way to eliminate a deficit is to either increase revenues or decrease spending. MPS is working to do both.

MPS does need to replenish its Fund Balance (our district savings account), which has been emptied after seven years of accessing it to cover our budget shortfalls. Board of Education policy requires that our Fund Balance carry at least 8% of our operating costs, or around $50 million. It currently stands at $42 million and is estimated to be less than $30 million at the end of this school year if expenses are not reduced.

What is a fund balance?

Just as a family may have an emergency savings account, a school district has a fund balance to manage risk and to respond to unforeseen circumstances without having to borrow money. We assess risk to determine how large a fund balance MPS needs. MPS policy requires that we keep a fund balance of 8% of the total budget.

Is MPS going to ask for more money from taxpayers through a referendum? If so, when?

Yes, the MPS Board of Education has indicated its support for a referendum in November 2018. Maximizing the amount we can levy would increase our budget by about $18 million, and a capital technology levy would allow us to move approximately $12 million out of our General Fund to pay for current technology costs. 

Won’t the new referendum or technology thing I’m hearing about fix the budget problem? Why don’t you use that money instead of raising class sizes or changing school start times?

Proposed referendum dollars won’t reach MPS until the 2019-2020 school year. Our $33 million budget deficit impacts the 2018-2019 school year and must be addressed during the current budget process.