Royal Oak Schools project $4.6 million structural shortfall as state aid plans fall short

Royal Oak Schools officials told the board on May 8 that preliminary state funding proposals and local assumptions leave the district with an estimated structural deficit of about $4.6 million for fiscal 2025–26.

At a board meeting presentation, finance staff identified the main drivers: changes to PA 152 and retirement (ORS) adjustments, the end or reduction of several targeted state grants (including 20f), and continuing local obligations such as health insurance and contracted services. “We really need to put those costs back in,” Miss Abella said when summarizing one-year carryovers the district used to balance the current year.

The presentation said the district used a student count of 4,836 for state-aid modeling and showed three draft scenarios aligned with the governor’s, House and Senate proposals. Under the governor’s proposal the district’s structural deficit would rise to roughly $5.1 million; the House and Senate proposals produce deficits near $4.9–5.0 million. Abella told trustees the district expects the state to finalize the school-aid budget close to July 1 and that Royal Oak will likely set a local budget before the final state figures arrive.

Why it matters: the shortfall affects staffing choices, program levels and capital plans. Abella listed budget assumptions the district is using for planning: flat enrollment, a partial (1.45%) increase in medical benefit caps tied to PA 152 phased in midyear, a net 1.45% reduction in retirement rates (after offsetting adjustments), and placeholder amounts for bargaining‑unit step-only increases while contract negotiations continue. The presentation estimated $580,000 in savings tied to the retirement-rate change but warned other ORS components offset larger reductions.

District staff outlined tools they will use to close gaps: attrition, selective FTE reductions tied to schedule efficiencies (using $160,000 per FTE as a planning figure), and further negotiations with contracted vendors (transportation, custodial). The board and staff discussed federal and state program changes the district counts on, including 31a, 147a, 30D and the discontinuation of the 20f allocation that had been part of recent budgets.

Board members asked about timing and next steps. Trustee Anderson called the outlook “worrisome” and asked for follow-up sessions; Abella said administrators will schedule more detailed planning meetings soon. The presentation also reminded trustees the district is negotiating with four bargaining units; Abella had included only step‑only assumptions pending concluded contracts.

The meeting also recorded several routine finance actions: the board voted to approve the International Academy OCCMA campus budget for 2025–26, to approve the Oakland Schools ISD budget, to award a laser-surfacing contract for tennis courts, to approve replacement kitchen equipment for Royal Oak Middle School and to renew the district’s food-service management agreement with Chartwells. Those motions were moved and seconded and carried as shown in meeting minutes.