Once in financial trouble, school district boasts a surplus

Six years ago the Hamtramck Public School District had a $5 million budget deficit. That crisis has been turned around and the district now enjoys a $5 million budget surplus.

 
By Charles Sercombe
What a difference a few years makes.
About six years ago the Hamtramck Public School District had a $5 million budget deficit and was facing state intervention unless the financial crisis was cleared up.
It was a huge challenge, but Superintendent Tom Niczay and his staff promised they would tackle it.
And they did.
At last week’s monthly school board meeting, it was noted that the district has made a 180-degree turnaround. Instead of a $5 million deficit, the district now has a $5 million budget surplus.
“That’s amazing,” said Board President Magdalena Srodek.
Srodek credited the district administration for its effort, but warned the district must remain vigilant in its financial dealings.
“We can’t go down that road again,” she said.
So how did the district accomplish this feat?
It took some drastic actions, which meant salary cuts and privatizing some services. Needless to say, not everyone was pleased with how the district came out of its deficit.
Superintended Niczay explained what took place:
“Hamtramck Public Schools was able to eliminate its deficit and build a healthy surplus through conservative spending and strict adherence to our Deficit Elimination Plan. The district fell into deficit six years ago following a $472 per pupil funding cut by the Michigan Department of Education.
“Acting on our fiscal responsibility the district immediately began to implement budget cuts and to reduce spending. That resulted in an operating surplus and reduced deficit each year for the past five years. This included wage freezes and pay cuts, increased insurance contributions by employees, reduced staffing levels and outsourcing non-instructional services.
“In addition enrollment has been stable with a spike this current year. The Michigan Department of Education has been slowly restoring a portion of the foundation allowance that was cut which helped.”
That financial boost has allowed the following:
“This year we were able to give employees a step increase on their negotiated salary schedule and a modest raise to hourly employees,” Niczay said. “For most employees it was the first pay increase since 2010. We have added back some positions which have been cut or were needed but not filled.”

Niczay also credited Sherry Lynem, the Director of Finance, for creating the district’s budgets and lifting the district out of its crisis.
The recovery has also allowed some other improvements, Niczay said.
“We have increased classroom supplies and protected Advanced Placement classes, music, art and athletics throughout this difficult financial time. We are planning to upgrade technology and do much needed building upgrades,” he said.
Although the district is now in the clear, Niczay stressed that the state has set strict financial benchmarks for districts.
“Recent legislation targets districts with a fund balance of 5 percent or less of revenues as one of the triggers of ‘financial distress,’ which could ultimately lead to state takeover,” Niczay said.
On top of that, the district – and all districts – is vulnerable to a loss in state financial aid if the number of enrolled students falls.
“Our financial challenge is as always remain ongoing for the most part due to potential federal and state budget cuts and the potential loss of enrollment,” Niczay said.
In Hamtramck, each student generates $7,000 per year for the district. In the current school year, the district enjoyed 200 extra students that were not budgeted.
For the past several years the district has aggressively campaigned to attract and retain students. The district has also partnered with automotive giant General Motors in providing special education and mentoring programs.