School payroll down, but benefit cost upPublished 5:41pm Tuesday, December 18, 2012
Dowagiac Union Schools District spends less on salary and wages than in 2009, but a larger share of each dollar goes to employee benefits because of fewer students, according to its auditor.
Mike Wilson of Norman and Paulsen’s Sturgis office gave the Dowagiac Board of Education a 25-minute presentation, including a “clean,” or unqualified opinion Monday night in the middle school cafeteria on the fiscal year ended June 30.
“You paid out $11,639,000 in 2009. Employee benefits on that were $5,543,000, which equates to about 48 cents for every dollar you paid out, primarily the employer Social Security tax, retirement funding and health insurance costs.”
In 2012, total payroll decreased to $10,523,000, “which makes sense,” Wilson said, “because annual pupil count decreased from 2,613 students five years ago to 2,394 in 2012. Employee benefits on that $10,523,000 totaled up to slightly under $6 million, so even though payroll decreased, employee benefits increased to 56 cents for every dollar. Retirement plan funding basically doubled within the last four years. You were around 11 percent, and now school districts are required to spend 26 percent.”
The fund balance is current available resources carried over to the next fiscal year.
Assets consist primarily of cash and cash equivalents and also monies due to the school district at fiscal year-end and typically collected within 60 days.
Dowagiac’s general fund had about $7.8 million in assets, of which $4 million was in cash and cash equivalents and $3.5 million was receivables due from other government units — primarily July and August state aid payments.
Wilson said, “You generated revenues of $19,983,000, of which approximately $5 million was from local sources — operating property taxes. You generated $13,200,000 from the State of Michigan, primarily your annual foundation allowance. You generated $1.5 million from various federal sources and another approximately $250,000 from inter-district and other types of revenues. You’re very dependent on state per-pupil funding.”
Liabilities amounted to almost $3 million, of which almost $1 million was accrued salaries and wages.
“That would be primarily teachers who elect to be paid in the summertime,” Wilson said. “Employee benefits on that payroll were about $600,000. Accounts payable — bills unpaid as of June 30 — accounted for approximately $600,000. The difference between your total assets and total liabilities totaled $4,845,000, of which approximately $90,000 is reflected as non-spendable — an asset that cannot easily be converted into cash, such as inventory of supplies.”
The district assigned $2 million for future working capital, leaving an unassigned fund balance in the general fund of $2,756,000 to carry over to the 2012-2013 fiscal year. That 13.5 percent falls below the recommended 15 percent.
“The most important thing about fund balance is being your own banker so you don’t have to borrow during cash-flow shortages,” he said. “Compared to most school districts in Michigan, I consider yours healthy. We audit a dozen school districts in St. Joseph, Cass and Kalamazoo counties.”
Expenditures incurred were $20,395,000, of which $11.7 million fell under instructional categories, $8.3 million qualified as supportive services and $400,000 was devoted to athletic programs.
“That left your general fund with about a $412,000 excess of expenditures over revenues,” Wilson said, “and you supported food service operations by $50,000. Bottom line, your general fund balance decreased $462,000.”
Over the past five years, total revenues went from $22.8 million to $21.1 million, while expenditures went from $21.7 million to $21.6 million.
A clean opinion “does not mean you’re financially healthy or financially poor,” Wilson said. “Detroit’s school district, with a $400 million fund balance deficit, receives a clean opinion on their financial statements. It simply means the information can be relied on by users and that the information is presented and accounted for correctly.”