Management Discussion & Analysis
Allendale Public Schools Management’s Discussion and
Analysis For the Fiscal Year Ended June 30, 2016
Factors Bearing on the District’s Future
At the time these financial statements were prepared and audited, the District was aware of the following items that could significantly affect its financial health in the future:
- The uncertainty of student foundation funding levels, as well as funding for other K-12 education programs, reflects the economic difficulties faced by the State of Michigan and the District. One of the most important factors affecting the District’s budget is student count. General Fund revenue is generated from the State’s per pupil allowance, a combination of State aid and property taxes. Under State law, the District cannot assess additional property tax revenue for general operations.
- Demographic projections indicate that enrollment is likely to continue growing slowly over the next several years. While this is good news, especially compared to most districts within the State, the lack of stability in the funding stream from the State, and rising costs in many areas including employee health insurance, retirement contribution costs, and utilities, District administration continues to remain diligent in its decision-making as the Board desires to increase its level of reserves (fund balance) that will allow the District to stop the practice of short-term borrowing for cash flow needs. Measures to accomplish this include, but are not limited to, cooperative agreements with the Ottawa Area Intermediate School District as well as neighboring public and parochial schools and strategic changes to how the District handles its non-instructional support services.
- In July 2015, Governor Snyder signed early warning legislation into law which requires school districts with fund balances less than 5 percent of the total budget to submit documentation to the Michigan Department of Treasury. The District’s fund balance is 4.5% and has slowly increased over the past six years. The Allendale Board of Education and district staff have maintained a balanced budget for 2016-17 and will continue to carefully monitor spending.
- In 2007, Allendale voters approved utilizing the School Bond Loan Fund, (a program created by the Michigan Legislature to assist school districts in bonding for new facilities) to construct new school buildings in order to accommodate the District’s growing population of students. New legislation passed in December 2012 obligates school districts to annually review their outstanding debt beginning in the fall of 2013 and levy a millage to ensure that the bond debt will be paid within a newly appointed 30-year period. House Bills 4496 and 4497 were signed into law by Governor Snyder in June 2015 which amended the 2012 legislation allowing the District to refinance $85 million of outstanding debt saving taxpayers approximately $23 million of future interest expense. District administration will be working with its financial advisors and bond attorney to determine if continued favorable interest rates will allow future refunding possibilities.
- As part of the District’s new Strategic Plan, the Board of Education will be considering a bond proposal to address identified and ongoing needs across the district. The elementary school is at capacity and will not be able to sustain the projected growth of the community. The Board of Education must decide how to address the space needs for early childhood programs. There are also future capital projects necessary to repair and replace certain facilities and equipment.
Contacting the District’s Financial Management
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report, or need additional information, please contact the Chief Financial Officer at Allendale Public Schools, 10505 Learning Lane, Allendale, MI 49401.