Flint, MI—Amid a projected decline in students, Flint Community Schools (FCS) is predicting a roughly $533,000 operational deficit for the next fiscal year.

But, officials say, that deficit would have been much higher without the district’s current COVID-19 relief funds.

Planning for after the district’s COVID funds, also known as ESSER funds, are spent and filling administrative vacancies were among the key steps to ensure Flint Schools will be financially solvent in the future, according to school officials at a Board of Education meeting on Wednesday, June 14, 2023. 

The fiscal discussions come at a time when the Board is weighing the district’s initial budget for the 2023 to 2024 fiscal year (FY) and finalizing the FY 2022-23 budget.

While the district projects an operational surplus of $2,951,580 for the final FY 2022-23 budget, in the FY 2023-24 budget, it predicts an operational deficit of $533,051.

That deficit is despite over $100.47 million in estimated general fund revenue, which Brian Jones, Flint Schools’ interim executive director of finance, called a conservative projection.

Next year’s projected revenues also represent a decrease of $5,412,229 from the current fiscal year’s estimates. The projected decrease mainly stems from an estimated reduction in state aid.

ESSER Funding

The district has a total allocation of over $155 million in ESSER funds, provided in three installments. The third and final round of ESSER funding, or ESSER III, is the largest installment and school districts are required to spend those funds by Sept. 30, 2024.

FCS Superintendent Kevelin Jones said he believed the district’s operational deficit would have ranged anywhere from $7-9 million for the current and next fiscal years if it weren’t for the ESSER funds.

But, after the district spends all of its ESSER funds, Brian said FCS could face “a financial cliff.”

“We do not have a cash flow problem as we speak. However, as we continue through this budget, I do want to call attention to the fact that it may appear that the district has sufficient fund balance or actually a great fund balance now, but it’s actually almost fool’s gold, because you have a lot of money in federal grants, and particularly ESSER grants, and once that money dries up, if careful adjustments are not made, the district could be facing a cliff, a financial cliff.” 

– Brian Jones, Flint Community Schools Interim Director of Finance

Meanwhile, Flint Schools predicts a drop in enrollment by 113 students, though the district’s foundation allowance—or the base amount of money that FCS receives in state support per student—is increasing to $9,608, up from $9,150 in FY 2022-23.

The projected state aid revenue is subject to amendments, like any other items in the budget, and could be adjusted based on the district’s student count in October 2023.

Staff vacancies, audit concerns

At Wednesday’s Board meeting, the interim finance director noted the budget is far from finalized and much more work remains to be done.

“In general, this entire budget needs to be firmed up,” Brian said. “There needs to be a deeper dive taken to get to what the actual numbers are. We put together the … best we could do in the time we had.”

He added that his main worry with the district’s finances lies in its vacant senior staff positions.

He said a chief financial officer works closely with the heads of human resources and academics to manage a budget. The former staff members in those positions have all resigned since April of this year.

The interim head of finance said another concern is “the lack of, let me just say, an adequate audit trail of transactions that have occurred so far. But that can be overcome if those positions had been filled because we could then rely on institutional memory to kind of piece it back together.”

Beyond the resignations of the three senior staff, the assistant superintendent who oversaw state and federal grants resigned recently as well. 

In regards to ESSER funding, Board Trustee Terae King Jr. asked the interim finance director about the steps that Flint Schools should take to limit potential deficit problems once the COVID funds are all spent.

“That will take an analysis of our programming and our staffing and [a] look at what can we afford. How do we live within our means in the absence of that money?,” Brian said, adding that it’s critical for Flint Schools to fill its staff vacancies.

Kevelin further noted that ESSER has been a crucial source of funding to reimburse for things like salary, benefits, services and maintenance.

“​​We are using those funds to keep us afloat,” he told Flint Beat. “But that’s why it’s been important to have a 5-to-10-year plan so that we can get to the place where we don’t have an operational deficit.” 

The 5-to-10-year plan is currently in the works, and consulting firm Plante Moran Cresa is exploring options for the Board’s consideration to potentially reduce the number of school buildings from 11 to between five and seven. Doing so would significantly lower the district’s operational expenses, according to the firm. 

Meanwhile, the Board will cast final votes on the FY 2023-24 budget and the final budget of the current fiscal year at its next meeting on Wednesday, June 21 at 6:30 p.m. at Accelerated Learning Academy.

Nicholas is Flint Beat’s public health and education reporter. He joins the team as he graduates from Santa Clara University, Calif. Nicholas has previously reported on dementia and brain health, as...