Milan Area Schools reviews multiple budget amendments and preliminary budgets amid state funding uncertainty

Milan Area Schools board members spent the bulk of their May 20 meeting reviewing first readings of several budget amendments and preliminary budgets as administrators warned that state retirement changes and one‑time revenues are eating into next year’s funding.

The most immediate item was the proposed 2024–25 general fund amendment presented by Krista Hendricks. “We are increasing our revenues by $744,000. We are decreasing our expenses by 9,900,” Hendricks said, and she told the board the amendment would leave the district with a projected fund balance of $2,652,579 — about 7.5 percent of the general fund for 2024–25.

Board members asked for details about the changes behind the increase. Hendricks said the revenue rise included adjustments to state aid and receipts from the Office of Retirement Services (ORS) tied to MPSERS, and noted a portion — roughly $250,000 — represented reimbursements tied to a 3% retiree health contribution that the state has funded. She also cited stronger-than-expected interest earnings and other smaller revenue items.

On the expenditure side, Hendricks said the amendment reduces some textbook and miscellaneous lines and accounts for unplanned capital replacements this year: a high‑school pool compressor ($42,000) and a high‑school boiler replacement ($55,000), along with retiree payouts not known in January’s numbers.

Administrators explained differences among advice from counsel and the auditor about using sinking fund balances before the new fiscal year. Hendricks said the district could begin spending sinking fund money now according to legal counsel, but the auditor cautioned doing so would produce a negative balance in an account and require a corrective action plan; she recommended against early use and noted sinking fund budgeting beginning July 1 would avoid that deficit outcome.

Board discussion then covered a set of other amendments and preliminary budgets presented as first readings:

- Debt funds (amendment and preliminary): Hendricks said the debt funds reconcile tax collections and debt service for refundings done in 2018 and 2019; she described those documents as largely mechanical adjustments with no impact on the general fund.

- Food service: The food service fund showed continued growth in fund balance, largely because the state program currently covers meals for all students. Hendricks said the district is using excess balance on one‑time kitchen upgrades (new steamers, chillers and walk‑in equipment) while avoiding significant permanent salary increases for food service staff that might not be affordable if universal free meals end.

- Student activity funds: Internal school accounts (fundraising, athletics, class accounts) continue to carry roughly $500,000–$600,000 districtwide. Administrators emphasized those are district‑controlled internal accounts, distinct from booster organizations.

- 2025–26 preliminary general fund: The board reviewed a preliminary 2025–26 general fund that begins with an estimated fund balance of $2.65 million and, under current assumptions, would end with roughly $46,000. Hendricks outlined key assumptions: a governor/senate proposed foundation allowance increase of $400 per pupil included in some versions of the state budgets, an anticipated decline of 38 students between February and October counts, and removal of several one‑time ORS/MPSERS receipts used in the current year. She said removal of one‑time ORS money and shifts in retirement funding produced a projected revenue decline of about $3.6 million compared with the current year.

Superintendent-level and board members repeatedly pressed the legislative angle: board members called for community advocacy to push state lawmakers for truly increased school aid, not funding shifts that the district must use to cover rising retirement and other state‑directed costs. “We need to have conversations with our legislators that we truly need to see an increase,” one board member said; another added, “This is a call to action.”

Sinking fund preliminary budget: The district’s 1.5‑mill sinking fund — passed by voters in the fall — is estimated to generate about $1.14 million after Headlee rollback effects (Hendricks said the levy will effectively be about 1.48 mills due to property valuation adjustments). Administrators presented a preliminary allocation that places funds against bus replacement, technology (student devices), operations and maintenance (roofs, boilers, parking lots), and a small amount for athletics; they emphasized the allocations are draft priorities and that sinking fund balances can be carried across years for larger projects.

Officials said the sinking fund gives the district flexibility to move certain capital replacements out of the general fund, reducing short‑term pressure on operating lines.

What’s next: All of the budget documents reviewed on May 20 were presented as first readings only. Administrators said board questions may be submitted in the weeks before the next meeting and that formal votes on these budgets are scheduled for the June 4 board meeting after required public notices and the district budget hearing.

Why it matters: Administrators and board members said the combination of volatile state retirement payments (MPSERS/ORS mechanics), removal of last year’s one‑time state receipts, and modest projected enrollment change together create pressure that cannot be solved locally. The board urged community members to contact state legislators and said they would continue to refine the district’s budget before the June adoption vote.

Ending: The district will hold required public budget hearings and return to the board for final votes in early June. Administrators said they will provide line‑by‑line detail on request and will post updated priority lists for sinking fund spending as estimates and project timelines solidify.