Archive: News

Ciaschi Dietershagen Little & Mickelson's Jerry Mickelson had bad news for Lansing's Board Of Education last week when he presented the audit for the fiscal year ending June 30, 2007.  Fund balances are alarming low, and district spending was $21,000 over budget last year, with the school lunch program also showing a deficit of $9,000.  "The decrease in fund balances is attributable to the excess of expenditures of $1,231,000 this past year," Mickelson  said.  "This is after the appropriation of some $506,000 from the debt service fund as a revenue source to the general fund, as well as a utilization of $200,000 of reserve funds as a revenue source.  In addition the budget was over spent some $21,000."

This was no surprise to board members who have been metaphorically robbing Paul to pay Peter, using reserve fund monies for years to keep the tax levy low without significantly cutting budgets in key areas where expenses are high.

The largest area of expenditure is in instructional staff, which accounted for 73.9% of the budget in 2006-2007.  The board has been reluctant to make cuts in teachers in the past several budget cycles, but with that segment weighing so heavily on the overall budget cuts in other areas have not been significant enough to match annual revenues from taxes and aid. The result this year was onerous to taxpayers.  While the budget itself was kept to a quite reasonable 3.8% rise, taxes were close to 10% more than last year to make up for errors in planning for aid the district ultimately didn't qualify for based on its spending being significantly less than projected. 

The budget process is a tug of war that nobody wins.  Last March Superintendent Mark Lewis told the board, "I think we need to know the consequences of cutting this budget down.  What would a 7% tax increase that's almost $400,000 in cuts -- what does that mean for program. What are the consequences of a 5% increase? It's up to the Board to decide whether cuts are acceptable. The cuts would be devastating."

At that same meeting Business Administrator Larry Lawrence was telling the board that they could not continue to use reserve funds to artificially keep the tax rate down.  "If you don't pay me now, you pay me later," he said. 

The Board chose to pay later, using more reserve funds for this year's budget.  But last week Mickelson echoed Lawrence's warning while noting that the board has begun to take measures to address spending and reporting.  "Your fund balances have decreased from $2,294,000 to $1,066,750," he said.  "Reserve fund balances have decreased from $1,004,000 to $904,000.  The decrease in fund balances is attributable to the excess of expenditures of $1,231,000 this past year.  This is after the appropriation of some $506,000 from the debt service fund as a revenue source to the general fund, as well as a utilization of $200,000 of reserve funds as a revenue source."


But Mickelson also had promising, if cautious, things to say.  "I want to emphasize first that the primary business functions like payroll administration, all the regular processes of requisition of purchase orders, all of the supplies," he said.  "The exception was credit card purchases lacking documentation.  It's not material to your financial operations, but still ties in to the need for a claims auditing process.  And a significant deficiency in the cash disbursement area."

Mickelson said the $21,000 overage isn't significant in terms of a multi-million dollar budget, but noted that it is a reflection of poor financial accountability practices.  But he also noted that the Board Of Education has already begun taking steps to address the problems, and that his firm has been conducting training sessions for teachers, administrators, and even students who deal with spending in the district. 

"It's a work in progress." Mickelson noted.  "When we identify problems we address those and move on."

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