EAST CHINA SCHOOL DISTRICT

1. EAST CHINA SCHOOL DISTRICT The US & Michigan Economies How They Impact ECSD April 2008

2. The U.S. Economy • There was a mild recession in the U.S. in 2001. • The economy began to grow significantly in 2003. • From summer 2003 to December 2007, U.S. employment increased by 8.7 million jobs (6.4%). • This was 52 consecutive months of job increases until January 2008. • January 2008 employment declined by 22,000 jobs.

3. U.S. Economy February 2008 employment declined by 63,000 jobs and March 2008 declined by 80,000 jobs U.S. payroll employment: 137.9 million Unemployment rate: 4.8% Manufacturing – 299,000 jobs lost over last year Construction – 331,000 jobs lost since September 2006 peak

4. Michigan’s Economic Recovery Has Not Happened • The Michigan economy has shown little improvement since the 2001 recession. • Michigan’s employment has lost 448,100 jobs since June 2000 (9.5%). • Michigan employment is expected to decline by 81,000 jobs in 2008 and 34,000 jobs in 2009. • NINE consecutive years of employment decline is the most in Michigan’s history

5. F

10. HOW DOES THE ECONOMY AFFECT THE BUDGET? Michigan’s job losses mean less revenue to State government from income taxes, business taxes, sales/use taxes Lack of revenue limits the State’s ability to fully fund the Foundation Allowance Lack of job opportunities affects how many people relocate to Michigan and our community

11. How Has State Spending Been Affected? • Due to limited revenue, overall state spending has decreased from 2002 to 2008 when adjusted for inflation • K-12, Community Colleges and Higher Ed, and revenue sharing payments have seen the greatest inflation-adjusted reductions

12. State Spending Selected Budget Areas 2002-03 to 2007-08 • Changes in State Spending from State Resources for: • Community Health = 53.0% • Corrections = 24.8% • Human Services = 14.0% • K-12 = 1.7% • Comm. College = 2.6% • Higher Ed. = 2.7% • Rev. Sharing = -13.2% TOTAL STATE SPENDING = 8.9% DETROIT CPI = 11.9%

14. Shifting Priorities in State Spending

15. FOUNDATION ALLOWANCE Over the 5 year period, 2003 - 2008: Total $ Increase $517 Average Annual Increase – 1.4% Total Percentage Increase 7.03% Compared toDetroit CPI Increase of 11.9% Current FoundationDetroit CPI Foundation $7,870 $8,515 Additional $645 per pupil needed to match overall inflation for the period ($3.5 million per year!!!)

18. ECSD Fall Enrollment Fiscal Year Ending June

19. Declining Enrollment • 75% of Michigan school districts are experiencing declining enrollment. • About 80% of the decline in enrollment in Michigan is due to lower birth rate • ECSD is graduating 500 seniors and bringing in about 300 kindergartners each year • The 25-35 year old population is declining in Michigan

20. St. Clair County Student Enrollment Declines2003-2007

21. Cost of Declining Enrollment 342 Students X $7,870 = $2,691,540 So, East China School District does not receive $2,691,540 in funding each year due to fewer students in our district

22. ECSD is Moving Forward! We are dealing with declining enrollment and the subsequent funding, but we are still meeting our goals! • Intervention Programs • Spanish Language Programs • Curriculum Realignment • Technology Initiatives • Student Performance • Communication internally and externally • Maintaining facilities • ECSD is THE school of choice (147 opting in with only 17 opting out, as reported to the state of Michigan)

23. ECSD PROJECTED BUDGET 2008-09

24. ECSD PROJECTED BUDGET 2009-10

25. Fund EquityConsiderations • FUND EQUITY is better known as CASH FLOW • $4.8 million is received after the fiscal year each year • Without $5 million in fund equity, ECSD would have to borrow money to meet payroll for July, August, and September and incur more cost • Fund equity can be used for one-time expenses, but should not fund ongoing expenses (it will deplete) • Operating expenses need to be within one percent of revenues for the budget to balance by the end of the fiscal year

26. ECSD PROJECTED FUND BALANCE

27. Sinking Fund Millage Renewal Election May 6, 2008 The Sinking Fund can continue to help decrease pressure on the general fund by paying for capital improvements and renovations. VOTE! May 6, 2008

28. East China School DistrictSinking Fund Proposal • Millage approved in 2005 is expiring. • Proposal will renew the expiring .4 mills. • 5 year term. • Will raise $750,000 per year. VOTE! Tuesday, May 6

29. Total Debt & Sinking Fund Levy

30. Are there restrictions on a sinking fund? A sinking fund is not allowed to be used for routine maintenance items. It cannot be used for salaries or benefits. It is restricted to capital maintenance projects as approved by the State Department of Treasury. The sinking fund must be audited each year. VOTE! Tuesday, May 6

31. Parking Lots/Driveways Repaved! Belle River & Pine River Elementary, Marine City Middle, Riverview East High, Stadium Transportation Department Carpeting Replaced! Eddy, Gearing, Palms, Pine River and Washington Elementary  Gym Bleachers Installed! Marine City Middle Sinking Fund Projects Completed VOTE! Tuesday, May 6

32. Sinking Fund Projects Completed •  Roofs Repaired! • District-wide  Student Lavatories Renovated! Marine City Middle  HVAC System Upgraded! Eddy & Washington Elementary Gym Floor Replaced! Gearing Elementary, Marine City High VOTE! Tuesday, May 6

33. Sinking Fund Projects PROPOSED •  Roof Replacements • Eddy, & Palms Elementary, Marine City & St. Clair High School, Administration Building, Ward Cottrell • HVAC Renovations Belle River & Pine River Elementary, St. Clair High School VOTE! Tuesday, May 6

34. Sinking Fund Projects PROPOSED •  Parking Lot Repaving • Eddy Elementary, Marine City High School, Administration Building •  Gym Floor Replacements • Belle River & Pine River Elementary •  Cafeteria Floor Replacement • Palms Elementary VOTE! Tuesday, May 6

35. East China School DistrictSinking Fund ProposalJUST THE FACTS!! • Renewal of expiring millage. • 4/10ths of one mill. • 5 year term. VOTE! Tuesday, May 6