Port Huron Area School District Overview of Financial Results - PowerPoint PPT Presentation

Port Huron Area School District Overview of Financial Results October 21, 2019 Board Meeting For the year ended June 30, 2019

Port Huron Area School District June 30, 2019 Financial Statement Audit Unmodified opinion – Highest form of assurance • No material weaknesses in internal controls identified • No material noncompliance noted • Federal Awards Audit District is in compliance with Federal guidelines • Major program audited – Title I, Part A - Education for the Disadvantaged • District is a Low Risk Auditee • No federal audit findings identified during our testing • Thank you to the business office for their professionalism and cooperation which allowed us to complete a timely audit! 2

Port Huron Area School District Balance Sheet – General Fund June 30, 2019 General Fund Assets $ 23,021,412 Liabilities and Deferred Inflows $ 12,063,216 Fund Balance: Nonspendable 208,463 Assigned 1,204,942 Unassigned 9,544,791 Total Fund Balance 10,958,196 Total Liabilities, Deferred Inflows of Resources and Fund Balance $ 23,021,412 3

Port Huron Area School District General Fund Revenue Year Ended June 30, 2019 Local Other $12,359,372 $410,079 14.24% 0.47% Federal $6,551,017 7.55% Interdistrict $3,098,059 3.57 State $64,376,088 74.17% Total Revenue $86,794,615 4

Port Huron Area School District Student Enrollment – Fall Student Count Years Ended June 30 12,000 11,242 10,889 10,588 10,316 9,921 9,820 10,000 9,542 9,262 9,066 8,801 8,619 8,351 8,056 7,832 8,000 6,000 4,000 2,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Note: Excludes Sec 25e Adjustments *2020 count is preliminary 5

Port Huron Area School District Student Enrollment – Statewide and Local Districts From May Revenue Estimating Conference 1,600,000 1,552,100 1,536,600 1,550,000 1,522,600 1,507,700 1,496,000 1,490,700 1,485,000 1,500,000 1,470,500 1,459,400 1,450,000 1,432,200 1,406,100 1,400,000 1,374,800 1,356,400 1,344,400 1,337,800 1,350,000 1,337,700 1,324,000 1,313,800 1,300,000 1,250,000 1,200,000 1,150,000 2012 2013 2014 2015 2016 2017 2018 2019 2020* Statewide Enrollment Local Districts *2020 enrollment is preliminary 6

Port Huron Area School District General Fund Expenditures (By Function) Year Ended June 30, 2019 Operations School Administration $6,476,411 $5,982,779 7.64% 7.06% Business, General, Central, Other $5,992,014 7.07% Instruction $51,677,450 60.95% Pupil/Instruction Services $11,033,369 13.01% Total Transportation $3,621,995 Expenditures 4.27% $84,784,018 7

Port Huron Area School District General Fund Expenditures (By Object) Year Ended June 30, 2019 Salaries Capital Outlay $228,075 $41,956,416 49.49% 0.26% Supplies and Materials $4,187,460 4.94% Purchased Services $10,127,893 11.95% Employee Benefits $28,284,174 33.36% Total Expenditures $84,784,018 8

Port Huron Area School District General Fund Expenditures (By Object) Year Ended June 30, 2019 Other Costs $14,543,428 17.15% Employee Costs Staff costs , whether district employees $70,240,590 or contracted staff, represent approximately 90% of all expenditures 82.85% Total Expenditures $84,784,018 9

Port Huron Area School District Analysis of General Fund Balance June 30, 2019 Change in Fund Balance Fund Balance - June 30, 2018 $ 8,947,599 Revenue and other financing sources $ 86,794,615 Expenditures and other financing uses 84,784,018 Current Year Increase 2,010,597 Fund Balance - June 30, 2019 $ 10,958,196 Components of Fund Balance Nonspendable: Inventory and Prepaids $ 208,463 Assigned: Anticipated use of fund balance in subsequent year 1,204,942 Unassigned 9,544,791 Total Fund Balance - June 30, 2019 $ 10,958,196 Fund balance as a percentage of expenditures 12.92% Weeks of operations 6.72 Fund balance as a percentage of unrestricted revenues (Early Warning metric) 12.63% 10

Port Huron Area School District Port Huron Area School District General Fund – Historical Fund Balance General Fund – Historical Fund Balance June 30, 2017 June 30, 2019 $11.8 12.0 $11.0 $10.4 $9.8 10.0 $8.9 $8.0 $7.9 $7.4 8.0 $7.0 Millions 6.0 $4.8 4.0 2.0 0.0 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Prelim Budget Fund balance as a % of 12.1% 11.4% 5.3% 8.9% 9.1% 8.1% 9.3% 10.4% 12.9% 11.2% expenditures 11

Port Huron Area School District Take Aways Year Ended June 30, 2019 ❖ During 2019, there was continued investment in buildings and facilities through community support of the 2016 Bond approval. Total capital outlay for 2019 was approximately $37.4 million of which approximately $37 million was spent from the 2016 Capital Projects Fund for construction, technology, furniture/equipment and other capital outlay expenditures. These funds were available through a 2016 bond issue. The bond issue was incurred for a comprehensive facilities upgrade and construction program, benefiting every building and student in the district. Without these funds, the school district’s needed capital improvements and any type of significant repair would be primarily the responsibility of the General Fund. ❖ Employee costs are the largest expenditure of the district. The total of salaries and benefits together make up 83 percent of total expenditures. For every dollar spent, 83 cents are spent on direct employee costs. Contract staff expenses are recorded in purchased services. When these purchased services are included in employee costs, then 90 percent or 90 cents for every dollar spent represents employee costs. 12

Port Huron Area School District Take Aways Year Ended June 30, 2019 ❖ All districts received large state funding reductions in the per pupil foundation allowance, beginning in fiscal year ending June 30, 2012. The foundation allowance per student increased $240 for the year ended June 30, 2019, only 6% higher than 2008- 09. Declining enrollment, a continuing concern across the state, puts additional pressure on revenues. Despite this, the District has been successful in providing a high level of service while remaining fiscally responsible. ❖ Five out of the last six years, the District has added to the fund balance. The General Fund’s ending fund balance was $11 million at June 30, 2019, which is 12.92% as a percent of expenditures and represents 6.72 weeks available to fund the general fund operations. Per Board Policy, the district should maintain fund balance at a level ranging from 2 to 2 ½ months of expenditures and MSBO (Michigan School Business Officials) recommends a fund balance level as a percent of expenditures of at least 15%. 13

Thank you.