Birmingham Public Schools Created A $14.3 Million Budget Deficit

BIRMINGHAM, MI — Birmingham Public School officials said they mismanaged their budget by $11.6 million, creating a $14.3 million budget shortfall for the 2021-2022 school year.

Birmingham school officials entered the school year with a projected $1.6 million budget shortfall, but that number ballooned to $14.6 million after officials said they found discrepancies within its general fund, including underestimating salary, health insurance, payroll tax, retirement and other benefit costs, while overestimating student enrollment numbers.

The district's original 2021-2022 budget was slated to bring in $122,471,210, but it was amended to $19,716,575. Moreover, the district was projected to spend $122,602,855, and that was also amended to $134,027,703.

Some of the more revealing spending differences included a salary differential of $3.5 million, retirement difference of $3 million difference and health insurance and other benefits by over $1.2 million.

Among one of the most notable revenue shortfalls was in property taxes, where the district said it took in $1.2 million less in property taxes. The discrepancy also revealed district officials have been overtaxing property owners in the district, an error that will result in a credit to taxpayers.

The district also miscalculated the money it would bring in from the Proposal A Obligation by about $5 million. The measure indicates the minimum per student funding allowance from the state.

Together, school officials said they were expecting to receive $6 million more in state aid and property taxes than it did, despite school data showing the district lost 186 students between this school year and last. There are currently 7,283 students enrolled in Birmingham Public Schools, a number that has declined from 8,375 students in the 2012-2013 school year, according to school data.

To address the budget shortfall, school officials said in a Q&A statement they will first explore "other funding avenues at the federal and state levels, seeking cost-saving opportunities, expanding revenue generating programs, and creating a long-term financial planning process."

"If the structural deficit persists or gets worse, we will have to make tough choices and difficult adjustments in the weeks and months ahead," the Q&A read.

Although the school district has a "rainy-day fund" of $20 million, the Q&A statement read the district cannot use the funds to clear the deficit because the funds allow the district to maintain a healthy fund balance appropriate for strong borrowing power regarding bonds and other financial matters.

However, the district could use $3 to $4 million of the funds toward deficit, pending board approval. School officials said they will keep families, staff, and students updated on this situation in the days ahead.

The school board will hold its next regular meeting next Tuesday at 7:00 p.m. to vote on an amended budget.