Nov. 13, 2013

By Tara Cavanaugh

Plante Moran is reporting its annual audit of the Ann Arbor Public Schools to the Board of Education on Nov. 13.

The district’s audit for the 2012-2013 fiscal year (July 1, 2012 to June 30, 2013) is better than expected: AAPS has $9.42 million instead of a projected $6.87 million in its fund balance (its savings) and will not have to borrow money to cover payroll costs through November.

That’s an extra $2.55 million the district did not anticipate having. AAPS Director of Finance Nancy Hoover credits last year’s spending restrictions and cost-cutting measures accounts for $1.6 million of that amount; the rest is from grants.

But a fund balance of $9.42 million is still small for such a large organization. AAPS’ current fund balance is worth about five percent of this year’s overall budget of $183 million. Michigan School Business Officials recommends a district have a fund balance worth ten to 15 percent of its overall budget, Hoover said.

At the end of fiscal year 2003-2004, the district had a fund balance of over $36 million, Hoover added. That figure was worth 21 percent of the district’s overall budget.

A larger fund balance gives the district more flexibility to deal with cuts from the state level. According to district officials, the district’s large fund balance of ten years ago has helped soften the blow of decreased state funding.

The state’s per-pupil funding has decreased since 2002. AAPS’ per-pupil funding in 2012 was $9,020; in 2002 it was $9,034.

During the same time, the district’s mandatory contribution to the state’s employee pension plan increased from 13 percent of employee salaries to 25 percent.

The district has been approved for a line of credit in case it needs to borrow to cover payroll costs, Hoover said. AAPS has never borrowed in order to fund payroll before.

The district anticipates facing similar budgetary challenges during the next fiscal year and continues to monitor finances for the 2014-2015 budget.

Related on the AAPS News:

• Enrollment Update: ‘When you eliminate teaching positions, it has an effect on class size’
• ‘This is a serious situation, and it’s not new’ –parents, administration review 2013-2014 budget

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