Belding OKs measure to stop borrowing against the state

By Cory Smith • Last Updated 12:50 pm on Thursday, March 08, 2012

BELDING — For the first time in several years, Belding Area Schools had to borrow against the State of Michigan in order to make payroll during the first four months of the school year.

As a result of that action, the Belding school board unanimously approved a measure to send a resolution to stop borrowing against the state to the desk of Gov. Rick Snyder, asking for the state to reimburse Michigan public school districts for any interest paid on loans taken to meet expenses before the October school aid payment.

“Essentially, because the state of Michigan’s fiscal year does not line up with our fiscal year, we go from that time period where our fiscal period starts to when their fiscal period starts where we’re not getting revenue, but we still have expenditures during that time,” Belding Superintendent Leslie Mount said. “We’ve been able, the last several years, to not have to borrow money because we had enough fund equity to avoid that. Well, this year, for the first time in quite some time, we fell into the category that most schools do where you have to borrow money to make payroll until you get that October state aid payment.”

According to Michigan School Business Officials (MSBO), nearly $700 million had to be borrowed across the state in 2011 in order to meet school expenses from July to October. The fiscal year for public schools begins in July of each year, while the state of Michigan’s fiscal year begins in October of every year.
According to the MSBO, that four-month gap is causing schools approximately $15 million across the state in interest that must be paid pack to banks.

“At a time when every dollar available to education and our children is crucial, it is unacceptable for our state to send school funding dollars to banks that is intended for school children,” Mount said.
Board of Education President Tom Humphreys echoed Mount’s sentiments.

“I will say that, usually I’m not the person who says let’s make all sorts of resolutions that really we don’t have any control over, but obviously this is an issue that affects not only us but all districts in Michigan and I think by doing this hopefully we’ll send a very clear message to Lansing,” he said. “To have to borrow money in order to make payroll, it is not right.”

According to State Sen. Judy Emmons, R-Sheridan, one possible solution could be to realign the two fiscal years.

“It may be as simple as realigning the dates of the fiscal years,” she said. “This issue will either go into the appropriations committee or it will come to the education committee. I don’t think anything has been introduced yet, but I know it has always been an issue. It was an issue when I was on a school board. Frankly, any school district that managed to accumulate in their fund equity enough so that they did not have to borrow was very fortunate. I don’t know if any district around here has been able to do that recently.”

According to Emmons, a realignment of fiscal years has been achieved before.

“It’s been done in the past,” she said. “In the 90’s, our fiscal year used to be July 1, just like the schools’. It was moved back to October 1 as a balancing move to help balance the state budget.

As far as realistically realigning the fiscal years, Emmons said “where there’s a will there’s a way.”

“You would have to look up all of the ramifications, and if you look back in the early 2000s we adjusted when we collected property taxes to help counties with cash flow. Clearly, it is worth looking at. We want to help them use all of the resources they have. If it’s getting buzz around this area, it’s probably getting buzz across the state.”

State Rep. Rick Outman, R-Six Lakes, declined to comment until he could study the issue further, then did not return repeated messages from The Daily News.

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