HARPER WOODS — During a time when budget news is usually bad news for schools and cities, Harper Woods Schools had a good year last year.
The district thought it was going to run a structural deficit in which it had to dig into its fund balance to make ends meet. When all the numbers came in, however, the district ended up growing its fund balance by more than $283,000.
“We are seeing some good news coming out of the end of the year budget process,” Superintendent Todd Biederwolf said to the school board at a Sept. 4 workshop meeting. “It’s encouraging, and we all worked hard.”
The district had a fund balance of $734,486 at the start of the 2011-12 fiscal year, and administrators estimated that they would spend $622,077 of that fund balance due to the need to spend more than they brought in. It would have left the district with a fund balance of $112,409 heading into this year, Biederwolf said in an email.
The audit process has revealed that the district didn’t lose money in the fund balance, but ended up adding to that balance. The audit is still an unofficial report at this time.
“As a result, we began fiscal year ‘11-‘12 with a fund balance of $734,486, and following revenues exceeding expenses by $238,527, we now anticipate closing fiscal ‘11-‘12 with a fund balance of $1,018,013,” Biederwolf explained in the email.
It’s an accomplishment many districts in the state haven’t been able to achieve in recent years, with some districts forced into deficit-reduction mode instead.
Despite the good news, Biederwolf said that the district needs to remain cautious because much of the savings stemmed from one-time, cost-saving possibilities and not long-term possibilities.
Also, this still doesn’t put the district where it needs to be for a healthy fund balance in regard to what is recommended for school districts.
“The $1 million fund balance represents about 7 percent of our annual operating budget,” Biederwolf said in the email. “Accounting standards and our district policy recommend a 15 percent fund balance.
“We remain significantly below this standard,” he said. “As a result, our budget, particularly looking two and three years forward, remains an area that will require continuous monitoring and management by both the Board of Education and district administration.”
Some board members raised concerns that they didn’t find out about the projected change in the financial picture until now. They want to see ongoing reports throughout the year, so they can see how different fund areas are doing and adjust accordingly.
The board members said that this was the second recent year that they’ve found out about a change in financial situation after the fact. It can affect how they plan for the following fiscal year.
Biederwolf agreed that they need to be informed throughout the year. He said that this could have gone the other way with the district being worse off than they thought, which would have put the district in a bad spot.
“We’ve been asking for this for years,” Board Vice President David Kien said of ongoing reports.
They’ve been promised a monthly financial report this year. A new business office staff came on not too long ago, and there was a lot of catching up to do.
The district had kept a tight rein on its finances, but maybe it could have purchased some new things, such as books. Board President Brian Selburn said that they’ve heard about a need for new textbooks for some classes, and if they had known the money wasn’t as tight as they thought, it’s something they could have considered.
In light of the financial news, Biederwolf said maybe the district could loosen its belt a notch, but only one.
“It’s good news, but you will continue to hear from me (that) we still have … challenges down those two- to three-year projections,” Biederwolf said.