Now that bargaining season is upon us, it is more important than ever to know where your district stands financially. Your bargaining team should have a handle on revenues (one-time versus ongoing), expenses and fund balance projections for the coming school year. With potential financial storm clouds always on the horizon, they also should have information on potential trends for future years as well.   

Although there may be a positive fund balance on the books, districts must look beyond the current financial situation and have a grasp of their financial status over time as well. A 10% fund balance may look robust by today’s standards, but if that fund balance stood at 20% just five years ago, a serious financial crisis is on the horizon. Even a projected 15% percent fund balance this year may not be enough to withstand potential budget hits if there is an economic recession.   

If your economic forecasts lend to caution, you may consider compensation options that do not include “on-schedule” raises, which create built-in costs that compound over time, which would only exacerbate potential financial concerns.  Instead, “off-schedule” payments can provide employees with additional income, but can be tied to fiscal conditions of the district without becoming part of base compensation. Positive fund balances are a big item bargaining units will point to when pushing for on-schedule salary increases. While off-schedule salary increases are usually not popular with a bargaining unit, such agreements can go a long way toward preventing (or staving off) future salary cuts, which are usually even harder to negotiate. In short, off-schedule payments allow a district to remain flexible and can be crucial to a district working to avoiding potential financial headwinds. 

It is no secret that funding for Michigan’s public schools is inadequate. Compounding this problem is our state’s consistent declining enrollment for many districts. Given this reality, it is imperative for district bargaining teams to not only have an understanding of the past, but to make an honest assessment of the foreseeable future as well. Districts should project how much fund balance they need to be fiscally responsible, and ensure they are able to maintain those amounts.  

Finally, share this information with your community. Posting a presentation to your district’s website that highlights revenue, expense and fund balance trends, as well as uses this trend data to project into the future, is vital to justifying the district’s position at the bargaining table.   

MASB is proud to provide bargaining and negotiation services tailored to your district’s particular needs. Reach out to our Labor Relations team for more information.