At our meeting last night the Board of Education received the 2009-10 fiscal year Audit Report from BDO Siedman. As has always been the case, and through the hard work and diligence of our Business Services staff led by Chris Fenton, we received an “unqualified” opinion from the auditors which basically means we are operating our finances in an appropriate manner, representing our numbers as they should be, and have proper controls in place.
What we refer to as “the budget” is really a projection and plan for how we intend to receive and invest funds. The audit is really a report that shows what actually happened. I like to compare the two, not just within a year but also from year to year, as a means of informing our future budget decisions.
For example, audit reports can give us a very accurate run rate of revenues and expenses. There are so many variables in our financial operations that 100% fidelity of a budget to audit is a practical impossibility. But we should endeavor to make this the case. Budget precision has been a recurrent them for me. The more precise we can be, the better we can optimize our investment decisions to best support our objectives.
2009-10 was a tumultuous year for public schools in Michigan. I felt it very important that we place 2009-10 in the proper context. To those ends, I delivered the presentation below:
GPPSS Financial Series_2010 Audit Report Summary
My main messages are:
- Our loss of revenue over the last three years has been substantial, 7.6%. The vast majority of that loss came in 2009-10.
- Reacting to that kind of loss within that year was not practical. Thus the structural response to that revenue loss came with the adoption of the 2010-11 budget, which also comprehends all of our new contracts with teachers and other bargaining units.
- Federal funding sources definitely softened the blow of the rapidly declining state revenues, but they too will begin to decline – both in our current budget year and into next year. Since most federal funds were of a “supplement, not supplant” variety, the job positions they funded are likely to expire.
The audit report itself is available at the Board office and will be posted to the web site this week. It now serves as a good foundation as we begin in earnest our 2011-12 budget planning process.