WB school board budget error explained

WEST BLOOMFIELD — After an accounting error led the West Bloomfield School District to dip into roughly $1.7 million of its fund balance, the district’s auditing firm explained the situation at a recent meeting.

According to its website, Plante Moran is one of the nation’s largest audit, tax, consulting and wealth management firms.

At the Board of Education meeting Oct. 23, one of the items on the agenda was “Plante Moran FY 23 audit-approval,” and representatives from Plante Moran spoke.

During a slideshow presentation, Chris Kassab, a principal CPA with Plante Moran, spoke about the district’s general fund.

“This slide here looks at the general fund budget, which was amended in June of 2023, compared to the actual results of the general fund as of June 30, ’23. So, budgeted revenue was $80.3 million; actual revenue came in at $78.9 (million),” he said. “So, revenue came in under budget by about $1.5 million. Budgeted expenditures was $79.3 million, and actual general fund expenditures came in at $81.5 (million). So, expenditures exceeded the budget by about $2.2 million.”

Kassab went on to provide an explanation.

“The primary reason for that overage, on the actual vs. budget, is due to one new piece of state funding that came in through the state of Michigan. Most K-12 districts received it,” he said. “It’s a one-time state supplemental payment that the district got. It was about $3.8 million.”

He said that money that comes in from the state goes right back out to the retirement system, “so it’s an in and an out,” he said. “So, it’s in the revenue budget of $3.8 million, but it was not budgeted for on the expense side. I think it’s important to note that from an actual accounting perspective, those dollars were properly accounted for. They were just not properly budgeted for in the expenditure.”

Later in the meeting, Kassab shared a recommendation.

“Our recommendation is really just to pay close attention to those new categoricals that come in through the state, and just be aware of how that impacts the accounting and what the accounting should be, so you can get that appropriately accounted for in the budgets and plan accordingly.”

 

Parent response
Kirsten Sonneville-Douglass is the parent of a student in the West Bloomfield School District, and although she acknowledged that at the Board of Education meeting the district received a “clean” audit and that making errors is normal for human beings, she took issue with the timing of the letter from the superintendent, which she said was sent out at approximately 4:30 p.m. on a Friday.

“They, in true public relations strategy, sent the communication on Friday afternoon. I know that’s not when they found out about it. It doesn’t lead to transparency,” Sonneville-Douglass said. “I wish they had a communications strategy to make sure the whole community as a whole knows. That’s something that, as a community member, we keep advocating for. It’s not just the parents. It’s all of the taxpayers, and making sure that they’re all aware of that error.”

Sonneville-Douglass expressed confidence that the district has a plan and that there will be a resolution.

“Do I feel this will be resolved quickly? Yes. Do I feel like it was a simple budgeting error? I hope so, yes. But … they need to be fiscally responsible with their constituents’ money,” she said.

The West Bloomfield School District declined to offer any further comments beyond the letter that was sent from Superintendent Dania H. Bazzi.

In the email dated Oct. 6, Bazzi wrote a letter to parents of students in the district:

“Dear Team WBSD,

“The strength of the West Bloomfield School District community lies in the mutual trust and respect that we have for each other. In WBSD, we are committed to transparency, accountability, and taking ownership for our mistakes. In that spirit, I want to inform you of an error that was recently discovered during the annual reconciliation of our budget that requires your attention and understanding.

“In the final budget for the 2022-23 school year, we projected that the District would add approximately $1.4 million to our fund balance. Unfortunately, there was an error in properly accounting for an expenditure related to funding we receive from the state, specifically the new 147c2 categorical funding, which was a one-time, state payment toward MPSERS (Michigan Public School Employees’ Retirement System). While the additional revenue from this source was included in the budget as an intended offset, it should have also been accounted for as an additional expenditure.

“What this means in plain language is that the State of Michigan provides funding to the school district via state aid, which we then are obligated to pay or ‘pass through’ into the employee retirement system. The error occurred in how the revenue and expenses were recorded for these funds. Please know that this has no impact on our employee retirements or state funding as our accounts with the state are fully up-to-date.

“This error has caused the need for us to utilize roughly $1.7 million of our fund balance for FY23 (the fiscal year budget for the 2022-23 school year). While concerning, this is something we can assess and manage; we are committed to rectifying this situation. Our cabinet is working diligently on solutions to minimize impact on our budget and fund equity, and prioritizing solutions with the least impact on students, including programs and staffing. Additionally, we are developing a plan to make necessary adjustments to the budget to ensure fiscal stability for the long term, again working to minimize the impact on students and staff. … In addition to identifying opportunities for efficiency in the budget, there has been a corrective action plan developed to ensure this does not occur again. To prevent similar issues in the future, our finance office has implemented a new month-end close process. This will allow us to identify accounting errors earlier if they occur.

“I want to express my gratitude for your partnership and understanding. We deeply regret the error and the concern it has and will cause. Please be assured, I am committed to transparently addressing the situation and ensuring a financially sound future for WBSD.

“Thank you for your continued support.”