DeWitt’s school budget: moving into the future

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Members of the DeWitt School Board in a meeting

 

By Skyler Ashley
Bath-DeWitt Connection staff reporter

The members of DeWitt’s school board met Oct. 12 to discuss issues including a looming $10 million debt, causing the board to face important decisions regarding expenditure.

Plante Moran, one of the largest certified public accounting and business advisory firms in the United States, were hired by the DeWitt School District to perform an audit to keep track of their assets and liabilities.

Mary Schafer, a partner of Plante Moran, explained that there were no “significant findings or issues and no fraud or illegal acts.” Schafer commended the school board’s management of funds during the difficult economic times from 2008 and onward.

Plante Moran found that the district has assets of $6.3 million (money the school owns) and liabilities (money the school owes to various accounts) reaching $4.2 million. Combined with the $1.1 million increase in revenue from 2014 to 2015, this is a positive aspect for DeWitt schools despite lingering debt problems.

According to the audit, 70 percent of the district’s expenditures are involved with what goes on in the classroom. These include the costs of faculty’s salaries, technology and materials—essentially anything that students interact with.

The DeWitt School District actually spends 7 percent more in this category than the surrounding districts, including East Lansing and Okemos.

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Breakdown of DeWitt school’s liabilities

With a range of phenomenally successful athletic programs, questions may be raised about too much being spent on said departments. This success is actually garnered without spending above 5 percent of the budget on athletics.

Also found by the audit is a potential cost of $35 million to be owed by Michigan to retired school employees. The sum represents the pending cost of faculty pensions.

The number seems incredibly daunting for a school district like DeWitt’s to owe, but this is only a potential cost. This total does not affect debt or revenue, it is the current cost of each employee of the districts’ pension.

DeWitt School Board President Mark Kellogg was able to break it down.

“It’s hard to look at a school district like a business. This cost of $35 million is actually a liability of the state of Michigan; the state has that money we don’t. That money is an obligation the state’s taken on,” Kellogg said.

Kellogg also clarified that 2015 is the first year Michigan has been required to report the cost of pending pensions.

“It’s getting expensive, we spend 26 cents of every dollar towards retirement,” an unfortunate national trend that DeWitt must also deal with, Kellogg said.

Apart from assets, liabilities and pensions, the biggest adversity facing the future of the DeWitt School District is the debt levied against its constituents. The sum is nearing $10 million, which Superintendent John Deiter reminded, is the maximum allowed for schools involved with the Michigan School Bond Qualification and Loan Program.

The school board has a few options and has plans to meet the local treasury on Jan. 4. Deiter pitched a few options, including a proposed buckle down on spending, which would see the debt lowered between $5 and $6 million by 2023.

However, Deiter elaborated that by doing so problems including technological needs and road repair would not be met proficiently.

Another proposal is to set aside $1 million into a sinking fund to be used for later debt repayment. Other options to increase revenue to repair the debt would be an increase on the property tax within the city of DeWitt.

Mark Skidmore, a Professor of Economics at Michigan State University with expertise in public finance and property taxation, explained:

“The challenge [of raising property tax] is mostly about perception. When you raise taxes you want something you can point to, like a new facility, proof that your money was spent responsibly. The perception when it comes to paying off debt is that they haven’t really gotten anything in return.”

The issue is a double-edged sword for the school board and final decisions have yet to be made.

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