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Relatively good audit report for Onaway

December 12, 2012
Jordan Travis - News Staff Writer , The Alpena News

ONAWAY - An independent auditor gave Onaway Area Community Schools relatively good news in his report, which he presented at the district board's Tuesday meeting.

Certified public accountant Doug Wohlberg said the district's financial statements are fair and accurate. His report factored in a drop in state funding and a slight uptick in enrollment. While the district's general fund balance shows a continuing but slowing downward trend, he said the number is relatively healthy.

The general fund balance dropped by $230,775, from $1,064,556 to $833,781, according to the report. The district continued to spend slightly more than it took in, as it has for at least five years running.

"No one likes to see this, but this isn't really bad news," Wohlberg said.

Onaway schools has "made the better choice" with its general fund balance, and has made changes to slow the fund's balance drop, Wohlberg said.

"Your choices are to have a large fund balance and then use it up so then you can maintain your programs," he said. "If you have a small fund balance, whenever you have a little hiccup or a bump you have to drop a program, and you get some money in and you add it back."

While the district is not alone in this trend, it will have to continue its work to fix it, Superintendent Rod Fullerton said.

"As the fund balance gets closer to zero, then we all have to- we can't have the annual cushion we've been inclined to use," he said after the meeting. "So we're going to have to become more of a balanced budget every year."

The general fund balance at the end of fiscal year 2012 equated to about 13 percent of expenditures, Wohlberg said. Relative to other school districts also facing state revenue cuts and slumping property values, this is a good number.

"I'm not going to say you're in great shape or anything like that," he said. "It depends on what's going to happen in Lansing over the next few months, couple of years, whatever, but 13 percent is about as good as you can get."

For long-term debt, the district owed $3,308,174 as of June 30, according to the report. Outstanding bonds are the single largest item at more than $2.9 million, with compensated absences at a distant second at $252,131. The overall total also includes early retirement incentives and installment purchase contracts.

To cover this debt, the district owes $537,008 by June 30, 2013 - the end of the current fiscal year - according to the report. About 88 percent of this will go to bonds and purchase contracts, with the remainder paying for interest. These annually required payments are projected to drop off significantly in 2019, to a total of $13,024.

Just what the district will pay in the future for retirement fund contributions is unknown, Wohlberg said. State legislators will have the final say, and the district should expect them to continue to rise.

State revenues dipped from the previous year's rate, with per-student foundation allowance down to $6,846, according to the report.

The 2011-12 fiscal year was the first to show an increase in enrollment in the report's five-year comparison. About nine more students joined, pushing the blended count up to 682 from 673. This is still 85 students short of the 2007-8 blended count. Accordingly, the downward trend in salary expenditures is mostly a result of the enrollment trend.

Fullerton will look into the May 7 election date to ask voters to renew the school's operating millage, he said. The 18-mill levy on commercial and other non-homestead properties made up about 37 percent of the district's total revenues during the 2011-12 school year, according to the audit report.

Board President Sharon Lyon said that while she understands district voters' general feeling about spending more money on taxes, the millage is a renewal. Its passage or failure would mean staying open or shutting the doors for the district.

In other business:

Jordan Travis can be reached via email at jtravis@thealpenanews.com or by phone at 358-5688.

 
 

 

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