Staff concessions of $5.7 million and privatizing custodial services could be key to balancing the Ypsilanti Public Schools budget for 2012-13.

Members of the Ypsilanti school board heard a preliminary budget presentation Tuesday from financial consultant Don Sovey and accountant Cathy Secor.

At the beginning of May, Ypsilanti passed its state-mandated deficit elimination plan (DEP). The plan calls for the board to approve a balanced budget that not only addresses the district’s $5.05 million structural deficit, but also chisels away at its now $9.954 million operational deficit.

The DEP, which was submitted to the Michigan Department of Education, has a goal of restoring the district’s negative fund balance to $900,000 by 2015-16.

Ypsilanti was projected to have an accumulated deficit of $6.38 million at the end of the current school year. However, in February, the board learned the district’s projections were flawed, and the deficit was closer to $9.4 million.

On Tuesday, board members again were told Ypsilanti’s projections were off, estimating the fund balance would be $9.954 million by June 30. Changing how Ypsilanti obtains custodial services could make up the $500,000 difference.

“We have to stop the bleeding,” said Board President David Bates. “…What other numbers aren’t we projecting accurately?”

There were three, “big ticket” items that contributed to the difference this time, Secor said. She said Ypsilanti’s substitute teacher costs have risen “through the roof.” The district saw an increase of about $53,000 in this line item.

Additionally, it will need to pay back about $183,000 to the county to cover a decline in property taxable values, she said.

Lastly, the food services department is about $72,000 over budget. So money will need to be taken from the general fund to supplement the food services budget, Secor said.

“There also have been some maintenance items — we had that chiller that went out,” she said, referring to an issue with the high school’s cooling system that nearly closed school for a day earlier this month. “We still have to buy paper towel and toilet paper and other things necessary to operate… Trust me, people are having to beg, borrow and plead to get a purchase order approved.”

In Ypsilanti’s deficit elimination plan, the board approved a variety of reductions the district would need to carry out in order to reach its benchmarks for the next three years. Those reductions for 2012-13 included cutting its staff by 97 positions, cutting transportation costs by $600,000 and cutting athletic costs by $225,000.

These reductions will not be final until the board approves its 2012-13 budget, which it must do by June 30.

Details of the transportation and athletic cuts will be flushed out during the budget process. But Secor is concerned Ypsilanti will not be able to reduce enough in these departments to actualize the savings it projected in its deficit elimination plan, she said.

Regardless, the money must come from somewhere, she said. Sovey added, currently, YPS is about $7.72 million short of balancing its budget.

District officials are in negotiations with unions.

“The district needs to target $5.7 million in layoffs or concessions,” Sovey said. “That’s what is needed in order to hit the DEP numbers.”

He said compensation costs of 1 percent for all employees, on average, is $331,571. For teachers, 1 percent is equal to $253,767. These figures include both retirement costs and the Federal Insurance Contributions Act (FICA) tax.

Sovey calculated in order to reach the $5.7 million target, YPS would need a 23 percent reduction in not just salary, but total cost from its staff members, he said.

However, Executive Director of Human Resources Sharon Irvine said the proposed 97 layoffs and position eliminations would impact the total percent needed from remaining staff members.

She said the 51 para-professionals and three Regional Career Technical Center employees who were on the chopping block already have been issued pink slips.

The district still is evaluating how many general and special education teachers will need to be laid off, Irvine said, explaining officials are tallying retirements and resignations and will present a final number to the board at its June 11 meeting.

Ypsilanti heard presentations Tuesday from two companies, Michigan-based Enviro-Clean and national corporation GCA Services Group, specializing in facilities maintenance and cleaning.

The district put out a request for proposals earlier this spring for custodial services. However, YPS is trying to work with its current employees to possibly make concessions that would net the estimated $500,000 savings instead, Bates said.

Both GCA and Enviro-Clean's bids were mid-range of 10 bids YPS received. GCA's proposal would cost the district $996,800 for the first year and $2.99 million during the course of a three-year contract.

Enviro-Clean's bid for one year was $977,944.80 and $2.933 million for three years.

Ypsilanti's current in-house janitorial staff costs YPS $1.615 million annually or $4.846 million over three years.

The board's next meeting will be June 11. More details on the budget will be discussed at that time. The district also will decide whether to outsource its janitorial services.

Staff reporter Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at daniellearndt@annarbor.com.