Lincoln Consolidated Schools expects its school enrollment numbers to keep declining as medical and retirement costs continue to rise in the 2010-11 fiscal year, Superintendent Lynn Cleary told the board during a recent budget presentation.

Among the most serious projections are reductions in special education funding.

As the district plans for the next fiscal year budget, Cleary laid out several significant budget assumptions:

• A 2.5-3 percent decrease in enrollment.
• A 0.5-2 percent increase in retirement costs.
• A $300 per-pupil decrease in state aid funding
• A 2 percent increase health care costs.
• Step increases for teachers.
• Special education funding reductions.

The district currently is reimbursed for 84 percent of its more than $9 million special education budget through the state and a Washtenaw Intermediate School District millage. But the district expects to only be reimbursed for 55 percent of its special education expenditures next fall because of falling property values, Cleary said.

Kathy Secor, business director for Lincoln schools, said in the best case scenario, the district will be forced to pull $1.9 million out of its general fund to cover special education costs.

The expected $300 per-pupil decrease in state aid isn't as bad as the district first anticipated, but board President Kim Samuelson said that number could fluctuate as it has in the past.

“It is good news, however, it’s very unstable and until (the state) gets into the same situation and timeframe next year, we don’t know for sure what it will be,” she said.

The district also must start paying step increases to teachers after the Lincoln Education Association agreed to a one-year freeze for this school year. An exact amount of what those raises will cost the district next year is not yet available.

In an effort to offset some of the lost revenue and increased costs, Cleary also laid out several major adjustments expected to start next fall.

Among the measures being discussed:

• Consolidating administrative services with neighboring districts.
• Moving Bessie Hoffman’s multiage program to the main campus.
• Implementing countywide transportation.
• Increasing schools of choice enrollment.
• Reducing staff due to enrollment decreases.

Cleary had already informed the transportation department that if she decided to outsource transportation - instead of opting for a countywide arrangement - she would provide employees there with an opportunity to match the savings.

Samuelson said the same opportunity would be provided to the custodial department.

“That’s a situation again where we will give our union an opportunity to see where they might be able to save the same amount of money as well,” she said.

The district likely won't outsource busing and is exploring how to share routes with neighboring districts to cut down on “deadhead” miles - those in which no students are on the bus, but the buses are on their way to pick up kids, officials said.

“We need to figure out where the best parked buses are to start their run so that they are utilized to their fullest capacity,” Secor said. “It would cut down on the number of miles when there are no students on the buses. If you do it that way, you will save money.”

Although Cleary didn’t elaborate on what a sharing arrangement would look like or which districts would share services, Ypsilanti Superintendent Dedrick Martin told the Ypsilanti school board on Monday that he'd had several conversations with Cleary. The two districts are arranging a joint board meeting in February.

Secor used the example of the two districts needing only one human resources employee because the job in both is essentially the same.

“They’re looking at ways to share administrators and to share administrative costs - it might be a 60-40 or 50-50 split, where before it used to cost us a whole person,” she said.

Secor said moving the multiage program from Bessie Hoffman, which is seven miles south of the district's main campus in Wayne County, to the main campus has several benefits.

Six buses currently make runs to the building from all corners of the district, food service is provided to the students, and two full-time custodians are required to maintain the school.

Secor sees another benefit in maximizing use of the main campus.

“Each year we’ve lost students, and our buildings aren’t being utilized 100 percent,” she said.

Despite adding students through schools of choice, Lincoln expects to see a 3 percent drop in enrollment and will make staff reductions accordingly, officials said.

”We feel we are going to lose students this fall as we did last fall,” Secor said.

No numbers are yet available for how much each of the measures might save the district.

Tom Perkins is a freelance writer for AnnArbor.com. Reach the news desk at news@annarbor.com or 734-623-2530.