For those of you who missed it, I thought it would be good to recap the top items discussed at the Financial Strategies conference held January 16 and 17 in Lansing. One thing is clear — the requirements and demands of the school business official (and school administrator) continue to increase.
Here are the big items to be aware of:
1. Healthcare Reform
The administrative rules and tracking associated with your employee groups will be tedious and cumbersome. Extreme care should be taken in (1) tracking the hours for your employees and their full-time equivalent status; (2) determining and designing an affordable healthcare option for your employee groups; and
(3) understanding the penalty provisions for not having the appropriation options available.
Since healthcare reform is effective January 1, 2014, you need to get up to speed on these options as you plan your budget for June 30, 2014. You’ll have six months of possible cost revisions to include in your budget process!
For now, you should:
- Define your plan year for purposes of coverage (pay or play).
- Define the periods of time for tracking new and ongoing employees, including how you’ll track hours worked.
- Identify the number of employees you currently employ who are working more than 30 hours per week and are not offered coverage.
- Determine benefit offerings to newly eligible employees.
- Modify your Section 125 plans or other employee handbook documents as needed.
The conversations on this topic will clearly continue as the rules are better defined and guidance is issued. However, you shouldn’t wait to get started on this important analysis.
2. Legal Updates
Brad Banasik from MASB gave an update on the most important laws impacting school business officials. The biggest appeared to be P.A. 606, which applies to contracts and financial transactions requiring board approval. This law indicates a board member is presumed to have a conflict of interest if the board member, or his or her family member, is an employee of the district. This can certainly create issues when board members might be voting on collective bargaining agreements and they have a family member working in the district. Please be mindful of this new law, and make sure to consult with legal counsel on how to disclose potential conflicts of interest and how to address them at the board table.
3. School Aid Update
Fresh off the revenue estimating conference, representatives from the House Fiscal Agency gave us some figures to be aware of as you plan your fiscal 2014 budgets. First, no pro-ration is expected for Fiscal 2013 as the School Aid Fund will end the year with a modest fund balance. Secondly, for Fiscal 2014 budgets, there are no expected increases in the foundation allowance; Best Practice funds are out of the financial projection as well as certain categorical funds (small class size and consolidation transition funds); it appears any increases in the School Aid funds will be used to keep the MPSERS rate at 25.36 percent. It’s expected that the state will need to allocate approximately $300 million toward the unfunded actuarial liability for the retirement system. In early February, the Governor’s executive budget recommendation will be issued. Details of how he would like to use the projected available resources will become clearer, and thus will begin the legislative process.
What does all this mean?
- Your budgets should not plan on any increased funding in the foundation allowance.
- Best Practice funds are likely to be removed from the financial projection.
- Hold retirement contributions at 25.36% percent, for now.
- Do the best you can to control costs, given no new revenue.
- Carefully review the Executive Budget recommendation for potential implications specific to your district.
4. Accounting and Auditing Update
We couldn't let an article go by without mentioning our presentation on upcoming accounting items. Good news! The only new item for June 30, 2013 is GASB 63/65, and we don't expect large changes to your financial statements. So, to end on a good note, this year's audit should not create many accounting changes for your business office!
Overall, the conference was informative and provided a good update to attendees. It’s clear that the reporting, tracking, and decision-making process for school boards, administrators, and others is not getting any easier or less intense. We emphasize with your situation; thank you for your hard work and diligence in serving the school community. We’re here to help in any way that we can.