School District Rainy Day Fund Surplus

By: Jamie Edmonds Email
By: Jamie Edmonds Email

In better times, the Potterville School District's rainy day fund was about 8 or 9 percent of its total operating costs, but these days it's down to less than 2 percent.

"Over time with cuts, we've tried to keep up with increased cost of operations and personnel," Timothy Donahue, Potterville's Superintendent, said.

Donahue said within a year, that fund will be completely wiped out, leaving them in a precarious situation.

"In 2011- 2012 we'll see it completely evaporate," he said.

David Martell of Michigan School Business Officials said Potterville is not alone, he said the newest cuts proposed by the governor could make things worse.

"If nothing else happened, we could have 166 school districts in the state forced into a deficit situation," Martell said.

But, on the other end of the spectrum, there are hundreds of districts that have saved much more than the recommended 15 percent in their rainy day funds.

According to the Senate Fiscal Agency, of the 546 traditional school districts in Michigan, 210 had a lot more in their coffers.

Locally most of the school districts do not fall into that category, minus Holt Public Schools whose fund balance stands at 18 percent.

Outside of Mid Michigan, Warren Woods in Macomb County has a fund balance at 25 percent. In Oakland County, Bloomfield Hills' account stands at nearly 30 percent.

One state senator said all of that excess equals millions of dollars the state could really use right now and has suggested recapturing it, but Martell said districts shouldn't be penalized for being frugal.

"We want school districts to be as efficient as possible," he said.

Donahue said he'd love to have 15 percent to work with, in Potterville's case, they'd be happy with 5 percent.

State Senator Jack Brandenburg is the lawmaker with the idea. He said if all the districts, which have amassed more than 15-percent in savings, would give up that money, it would equal $282 million.

For now, it's just an idea, no bill has been proposed.

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