School board urged to build up financial reserves
SWARTZ CREEK – Swartz Creek Community Schools Superintendent Ben Mainka is recommending the Board of Education shore up the district’s rainy day fund.
At just more than 6 percent of operating costs, the fund balance is “dangerously low,” but “in no means is the district in financial distress,” Mainka said at the Wednesday, Feb. 8, school board meeting.
The district closed the books on the 2015-16 fiscal year with about $2.4 million in fund equity. It entered the 2016-17 fiscal year with an operating budget around $37 million, Mainka said.
The school board has adjusted the budget – which they approved in June based on best guesses for then-unknown revenues and expenditures – as accurate numbers have become available.
The state recommends school districts maintain a savings balance equal to 15 percent of their operating bud- gets.
“That’s very high,” said Mainka. “Most districts are around 10 percent.”
Districts that drop below the 5 percent threshold trigger intervention by the state.
At 6.5 percent, Swartz Creek has one of the lowest fund balance percentages in Genesee County, Mainka said.
As the board prepares to piece together a budget for the 2017-18 fiscal year, which begins July 1, Mainka recommends they look for ways to gradually increase the fund balance to 8 or 9 percent over the next few years.
If operating costs hold steady, that will mean adding between $555,000 and $740,000 to the reserves.
Records show that the district added about $700,000 to the fund in the past three years.
To continue that trend will involve spending restrictions, Mainka said.
“To get there is going to take time,” said school board Trustee Lorraine Ahearne. “Hopefully we won’t have an emergency before then.”
Trustee Ken Engel suggested the superintendent meet with union leaders to get a feel for their level of support.
“Ask them, if we get to 8 percent, are you going to throw that in our faces?” Engel said.
Mainka had some encouraging news for the district: Gov. Snyder’s new budget includes a $128 million increase in per-pupil allowances statewide. That means Swartz Creek stands to receive $50 to $100 more per pupil next year.
“That’s a great thing,” said Mainka.
This year’s allowance is $7,511.
On the flip side of that coin, preliminary and uncertified results of the spring student count taken Feb. 8 show that enrollment is between 3,810 and 3,820.
“It’s safe to say that there’s been a steady drop of about 50 students per year,” Mainka said, adding that districts throughout the state have had similar results.
The new state budget could provide the district with additional funding for at-risk populations and for declining enrollment.
“This is all very positive news,” said Mainka.
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