November 23, 2011 - Decreases in revenue and appropriate level of fund balance was the talk of the town during the audit presentation by Yeo & Yeo P.C. Manager Jacob Sopcynzski at the Monday, Nov. 14 Oxford Board of Education meeting.
The audited numbers indicated the district generated $43,308,814 in revenue, while only expending $42,296,756, thus leaving them with an additional $1,012,058 to add to its growing fund balance.
However, Sopcynzski noted the district is looking to sustain big losses in revenue for the 2012 budget due to onetime money from EduJobs and American Recovery and Reinvestment Act (ARRA) running out.
"We show that (in) the 2012 budgeted numbers . . . we see a big decrease in the amount of revenue, and that is largely due to the cuts by the state and federal government," Sopcynzski said.
According to Tim Loock, assistant superintendent for business and operations, the district is looking to lose approximately $963,599 in EduJobs and $701,329 in ARRA money.
Sopcynzski said he couldn't begin to project how much the district could lose next year.
"I'm not a fortune teller, I can't tell the tell the future. All I can say is look, there are some warning signs out there. The state is defiantly strapped for cash (and) property values around the state are decreasing," he said.
Even with the loss of the EduJobs and ARRA money, Sopcynzski said the district should be able to survive thanks to their strong fund balance.
"One thing the district has done over the past five years (is) build up a little bit of a fund balance," he said.
In 2007, the district's fund balance was at $3,595,976. As of June 30, 2011, the district's fund balance was $6,858,436.
However, the district's fund balance is expected to drop to approximately $5,427,362 in 2012.
"There are a lot of good reasons to have a positive fund balance," Sopcynzski told the board. "One is that uncertainty of the state. We don't know what we are going to get for revenue necessarily. We can have a pretty good idea what we are going to get, but we lost the EduJobs money, we lost the ARRA Title One money."
He also mentioned a positive fund balance also helps safeguard against future losses.
"Healthcare cost in the state of Michigan with MESA is skyrocketing, and who knows what is going to happen in the future with that," he said.
Board President Colleen Schultz asked Sopcynzski what he thought an appropriate fund balance level was.
Sopcynzski said the Michigan School Business Officials recommends a district keep their fund balance around 15 percent of their total expenditures.
It should be noted that while state law requires districts to not spend all the money in their funds – which results in the accumulation of a fund balance – it does not require any minimum percentage for fund balances. The aforementioned 15 percent is an opinion or guideline, it's not a state requirement.
Currently, the Oxford district's fund balance is at 16.2 percent of expenditures.
"While in some aspects things are looking better, but we all know our economy is not out of the woods," board trustee Kim Shumaker said. "There is no saying in a year or two we might not be in dire straights again. To go ahead and start spending what you've got, and now all of a sudden hard times fall again, now all of a sudden you are scrambling."
"To me, it makes more sense to keep some money aside for a rainy day...one of the things we told our employees is if they give back, this is the nest egg to be able to pay them, and I would not want to turn around and spend that money just to get it to somebody's opinion to what is a reasonable percent(age)," Shumaker added. "That might put our employees at risk."
Andrew Moser is a staff writer for the Oxford Leader.