The overall fund balance of the Dowagiac school district decreased by nearly $1.2 million, according to a report issued to the Dowagiac Union School District Board of Education during its December meeting Monday.

The district’s 2012-2013 annual financial audit was completed by Norman & Paulsen, an accounting firm based out of Sturgis and Three Rivers. Mike Wilson, a representative with the firm, read the results of the study to the board, detailing the report’s findings and answering questions from members.

The decrease in fund balance is slightly lower than board originally predicted, projecting $1.6 million decline in its final budget for the year, the report found.

The fund balance refers to the difference between the assets and liability in government funds, and is often used as a metric to measure the feasibility of future expenditures. The district’s funds are distributed between three different categories: the general fund, debt service fund and food service fund.

“Most school districts tend to not have very many funds,” Wilson said. “Most governmental funds tend to have close to 30 special funds.”

The three funds all had fund balances in the positive, the report stated.

The report also stated that the district received $21 million in overall revenue, which is a decline seen from numbers in 2009, when the school brought in $22 million. The reason for this decline is due primarily to a 9 percent drop in overall student enrollment during that same time period, meaning the district receives less money from the state.

“That’s where the bulk of your funding comes from,” Wilson said.

Compounding this issue is the fact that the district is still paying out the same amount for expenditures that it did four years ago, the report stated, with the largest chunk of that going toward employee benefits.

“That, obviously, is not a good thing, and cannot be self-supporting going forward” Wilson added. “

In addition, the net position, or the overall value of assets and liabilities, of the district also decreased by $1.3 million, the report stated.

“That will tend to mirror the change in your fund balance,” Wilson said. “If your fund balance goes down, so will your net position.”

The school board also enacted and approved a number of changes to their board and administrative policies on Monday. More than 20 different policies were added or amended to bring the district in compliance with changes to state laws.

In addition, the board approved a modification to the district’s contract with Superintendent Mark Daniel. The board now has to notify the superintendent 90 days before any changes made to the contract, down from the 180 days notice required in the previous language of the document.

The district also honored its students of the month for November, handing out awards to a student from each of its six schools.

The recipients were:

• Millicent Hartsig from Justus Gage

• Hanna Steckler from Sister Lakes

• Conner Howard from Union High School

• Connor Carlisle from Dowagiac Middle School

• Landon Taggart from Patrick Hamilton

• Isabelle Deering from Kincheloe