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Thursday, 17 October 2013 15:47

Marlette School Board releases statement on district's financial situation

(MARLETTE) -- "The board of education understands the importance of financial steadiness and recognizes the importance of healthy fund balances, particularly in current difficult economic times. However, the district is currently dealing with a cash flow shortfall. To address this, the board is working with both the school district's auditors and attorneys. The board has identified both a short-term solution of a supplemental state aid note and a longer term solution of building fund balances. Together, this two-pronged approach will solve the current issue and will help to avoid it in the future.

On that first prong, Marlette Community Schools' board of education concludes that the district has a current cash flow shortfall that must be addressed immediately. To address that shortfall, the board intends to issue a new tax-exempt state aid note borrowing, which is in addition to the note previously issued by the district in August 2013. Pursuant to both federal and Michigan law, the district has the authority to issue that additional state aid note. That note will ensure that the district is able to meet its upcoming financial obligations, particularly the timely payment of payroll. The board expects that borrowing will be finalized before the district's next payroll. A supplemental borrowing is a common solution for a Michigan school district that finds that it has a greater shortfall than earlier expected.

On the second prong, the process for the district's audit of fiscal year 2012-13 has begun. Once that audit is complete; the district will evaluate what the general fund balance was as of the end of fiscal year 2012-13. Provided the fund balance is positive, the board of education is committed to building its general fund balance to avoid the need for multiple cash flow borrowings in the future. If the fund balance is not positive, the board of education is committed to taking all necessary steps required by both state law and good fiscal management to return the district's fund balance to a positive as soon as reasonably possible.

By establishing a practice of maintaining a higher general fund balance, the board will give the district greater steadiness and financial security. With this dual approach the board of education expects to promptly resolve the present issue, leaving Marlette Community Schools both stronger and more secure."