Saline School District's Books Are Good, But Fund Balance Remains Small

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 11/21/2019 - 15:52
A look at district spending between 2018 and 2019.

The Saline Area Schools finance department's books were given a clean bill of health by auditors at Plante & Moran PLLC for this year's audit of the district's most recently completed fiscal year.

Jeffrey Higgins, CPA and partner with Plante & Moran, personally delivered the news that the district's financials were given an "unmodified or clean opinion," which is the highest rating possible.

"The financial statements are free of material misstatements - this would be the highest level of assurance that we as auditors can provide on a set of financial statements," Higgins said.

Alas, solid accounting and financial reporting standards and practices are great, but even the best books can contain harsh realities, some of which Higgins and Plante & Moran CPA and manager Anthony Sasinowski delved into in their report to the Board of Education.

Sasinowski's analysis focused on the district's general fund and accompanying general fund balance, which is the most critical fund for a Michigan school district as it contains the money that is used to compensate and provide benefits for teachers, with anything leftover being free for transfer to and use in more specialized funds.

That action typically doesn't happen without some other accompanying accounting moves involving other funds or one-time revenue or expense events, as many districts typically don't have excess funds in the general fund after paying the folks who teach and support the students.

Notable observations about the district's finances as portrayed in the audit are as follows:

  • Inflows of money from Michigan through Proposal A are up $238 per student, contributing to receivable assets increasing from $8.2 million to $9.5 million during 2018-2019.
  • Liabilities are up from $7.16 million to $10.4 million, although the district was required to pay monies into pension funds that were counted under that expanse category. 
  • Overall revenue is up 2.11 percent and expenditures are up 2.23 percent.

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  • Sasinowski articulated the reality that Saline Area Schools faces: "You really don't have any control over your revenues. You get what the state gives you. The comment made by {Trustee} Heidi [Pfannes] earlier about the state not putting education first, it kind of shows when you look at a slide like this. You have such nominal increases in revenue year-over-year. It's a pretty tight amount of money to work with."

  • One shining fact expressed in the financials is that Saline Area Schools delivers more of every dollar earned from the state's per pupil foundation allowance to the classroom than county peers.

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  • Looking at a 10-year window of the fund balance, the district's fund balance is down a net $833,000. Currently, the fund balance is $2.886 million compared to $2.898 in 2018.

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  • BoE Trustee and finance committee chair Dennis Valenti asked Higgins how much of a concern the fund balance was from his view as a CPA. Higgins said that he couldn't imagine the district adequately weathering a future economic downturn with its current fund balance. Generally, a 15 percent fund balance is considered healthy by the Michigan Association of School Boards.

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  • Higgins described the trajectory of the district's fund balance as in a "downward trend" and he added that it is "concerning." Over the course of Saline Area Schools' $833,000 decline in fund balance, Proposal A foundation allowance increases over been greater than they historically have been. Higgins postulated that Proposal A funding increases could return to the historical mean of 2 percent, particularly in an economic slowdown. 

     

Sean Dalton's picture
Sean Dalton
Sean Dalton is a veteran of the Washtenaw County journalism scene. He co-founded WeLoveDexter.com and WeLoveAnnArbor.com and also worked for Heritage Newspapers.