A memo sent by the Michigan Department of Education last week has school districts preparing for what no district wants — a possible loss in revenue.

A shortfall ranging in the billions is possible.

Funding for the state's school aid fund, which distributes money to school districts based on student count, could be $1 billion to $3 billion below estimates for the current fiscal year.

The higher end of that range climbs to $4 billion for the next fiscal year, which begins July 1.

A $1 billion decline in revenue amounts to about $685 lost per student.

"That was a tough thing to read," said Rick Hilderley.

The Tecumseh superintendent wasn't the only one.

"Really concerned," Adrian Superintendent Bob Behnke said. "That definitely raises big concerns as a school district."

Districts are coming up on budget season. Each year is a guessing game of sorts as schools try to predict how much money will be allocated based on student population. Student count is multiplied by per-student funding to determine a district's operating budget — commonly referred to as the general fund.

Throw in a possible multibillion dollar loss of revenue and it makes planning a budget that much harder.

Three taxes make up the majority of state funding for schools — sales tax, income tax and a 6-mill levy on all property. Sales tax comprises the largest amount of revenue.

It's hard to imagine a scenario where sales tax isn't down since many businesses have been closed the past few weeks.

The memo advised schools to develop several budget scenarios with varying per student cuts, $200, $350, $500, etc. A worst-case scenario was more than $650 per student.

That's a fairly large range for a district to consider. Hilderley said it could mean as little as a few $100,000 lost or close to $2 million at Tecumseh.

It makes cuts likely.

Discussions with superintendents indicated cuts would start around the edges.

"You try to stay as far away from the classroom as possible," Hilderley said.

But that's apt to get difficult rather quickly. Close to 80% of a school district's expenses goes toward teachers and support staff.

Behnke said they have some options to scale back certain programs without impacting the classroom. Still though, with a percentage that high, there's only so much that can be cut around the edges.

"It gets real tough real quick," Behnke said. "We don't have a lot of those options."

Adrian is in a good position for the time being. Behnke said the district is on track to end the year in the positive, having been able to save on some expenses, such as athletic transportation.

It could help soften the impact any cuts could have. However, the state has up until June 1 to decide if there will be revenue cuts for this year.

"Any cuts that come this year basically lowers any carryover to tackle bigger problems," Behnke said.

Schools are to pay all staff through the rest of the year, according to the order of Gov. Gretchen Whitmer. If districts receive last-minute cuts, any savings made this year will dry up fast.

"If the revenue numbers are as bad as the doomsday predictions … yeah, we could have some cuts in significant ways that nobody is going to be happy about," Hilderley said.

The Lenawee Intermediate School District is in a little better of a position. The district receives funding for special education programs and the middle college program — in all, about 325 students.

Funding cuts aren't too much of a concern, especially for special education programs as they are mandated, according to Superintendent Mark Haag.

A millage pays for instructors. Haag said there's no outlook currently where he could imagine having to cut Tech Center programs, either.

"Our impact won't be anywhere near what a local district feels," he said.

The LISD plans to help local districts impacted by cuts if possible.

Behnke said Adrian has seen an increase in per-student funding ranging between $150 and $200 in recent years. Adrian bases its budget projections on this, along with an expected drop in students each year.

Adrian has averaged a 45-student loss the past five years. This had led the district to budget conservatively. It's better that way, according to Behnke, and can lead to pleasant surprises.

Take last year for example. APS recorded an increase of 35 students which led to the hiring of another kindergarten teacher.

Tecumseh pencils in a loss of a few students each year based on its trends, too, but less revenue and a loss of students will make margins tighter.

And there's plenty of questions that remain unanswered. Will the coronavirus be under control? What if parents aren't comfortable sending their kids back to school? What will learning look like?

School districts will have a better understanding on revenue projections following a Consensus Revenue Estimating Conference on Friday, May 15. It'll be one more piece that will help schools plan their budget.

There are no plans at Adrian or Tecumseh to make cuts at this time. That doesn't mean superintendents aren't sweating it, though.

"I think any Michigan superintendent would be lying if they said they weren't nervous," Hilderley said.