You might think that the budget is something that is looked at once or twice a year, but for public schools, it really is a year-round process. The General Fund original budget must be set before July 1st of the new fiscal year. An amended budget is typically presented mid-year, between November – February and a final amended budget is presented to the board again in late May/June.
Much of the information we need to set the original budget is based on the School Aid Fund budget that is approved by the Michigan legislature and signed by the Governor. The Governor releases his Executive Budget Recommendations in early February. The House and the Senate then both determine their own versions of the budget, resolve their differences and present a final version to the Governor for approval. This may not happen until late in the spring, but hopefully is settled sometime in May.
Since the foundation allowance and state categorical revenues make up about 85% of the total revenue we receive in Saline, the School Aid Fund budget is one of the most important pieces of information needed to prepare the original budget for the next fiscal year. But student enrollment projections are also needed, as the state revenues are calculated “per pupil”. Student enrollment is “counted” by the State twice – once in October and once in February – and a “blended count” is then used to determine our Foundation and categorical revenues. We must estimate what our enrollment will be for both of those counts when preparing the original budget. For the last several years, we have had enrollment projections prepared by an outside source, and the projections take into account both State and Local demographic trends.
On the expenditure side, staff costs are approximately 87% of our total expenses. If contracts are in place for the coming year, we have much of the information needed, however, staffing needs do change over the summer and health benefit enrollment doesn’t take place until after the start of the school year.
Utility costs are estimated on past use and anticipated rates. Saline participates in a consortium for our electricity and has locked in heating rates for three years based on our average usage. But unusual weather can make a big impact on our budget. The Polar Vortex we experienced in the winter of 2014 for example increased our district wide utility costs by approximately $400,000 for the year.
District goals for the coming year, as well as technology and facility needs must also be determined and prioritized, based on available funds. This information comes from individual meetings with administrators from each Building/Department and is reviewed with both Central Administration and the Board of Education Finance Committee.
Overall, the areas we must consider include:
• State Funding (Foundation Allowance/Categoricals)
• Federal Funding (Grants)
• Intermediate Funding (Special Education funding from county level millage)
o Staffing levels (increases or decreases)
o Health costs
o Retirement Costs
• Utility Costs
• District Goals
• Facility Needs
• Technology Needs
Once the original budget is prepared, it must be available for public review for a period of at least six days and a public hearing regarding the budget and the proposed property tax millage rates must be held prior to the adoption of the budget. The budget must be posted on the district website within 30 days of adoption by the Board of Education.
A budget amendment is warranted whenever the district is aware that resources are not sufficient to fund original appropriations or when additional information is gathered that substantially affects the budget. Saline prepares an amended budget between November – February. The updated budget is adopted by the Board of Education and posted to the district website, but does not require a public hearing.
The final budget amendment is prepared and adopted at the same time as the original budget for the following fiscal year, in late May/early June. The final budget amendment should reflect as accurately as possible, the actual revenue/expenditures for the fiscal year and is compared to actual revenue/expenditures in the Financial Audit Report. The Department of Education reviews the financials of all districts and any discrepancies greater than 1% of total revenues or total expenditures require an explanation by the district to the Department of Education Office of Audits.
All budgets for other funds (Community Education, Food Service, Debt, Capital Projects, Sinking Fund) are prepared on the same schedule as the General Fund, but do not always required a mid-year amendment.
At the conclusion of each fiscal year, an independent audit of the District’s financial records must be completed and the Financial Report is presented to the Board of Education and posted on the district website for public review. The audit is conducted in accordance with generally accepted auditing standards to provide reasonable assurance that the financial statements are free from material misstatement. Internal controls of the district are reviewed and audit procedures and samples are determined in part, based on that review.
The Financial Report for the 2013-14 Fiscal Year will be delivered to the Board of Education at the October 28, 2014 Board Meeting, finalizing the budget and review process for that fiscal year, which began 18 months earlier with the creation of the original budget. We are now starting to work on an amended budget for 2014-15, to be presented to the Board sometime in the next three months. So no matter what time of year, it is always Budget Season.