Livonia schools report healthy fund balance but warn state retirement rate changes will offset part of proposed per-pupil increase

Livonia Public Schools finance staff told the board Monday that the district expects to finish the school year with a healthy fund balance but cautioned that proposed changes to state retirement contribution rates will reduce the practical benefit of a governor-proposed per-pupil increase.

Mr. Johnson, speaking for the finance committee, and Mrs. Smith, the district finance presenter, reported the district began the year with $33,300,000 in fund balance and—after a December budget amendment—was projecting to end the school year at about $31,400,000. With updates to revenue and no expected expenditure adjustments, Mrs. Smith said the district now projects an ending balance of $31,900,000, roughly a 17.2% fund balance, within the district’s 15–20% target.

Mrs. Smith told the board the district has seen stronger investment earnings than budgeted: "I had budgeted for us to receive $100,000 a month in interest earnings on our general fund dollars. And that's gonna be more like $1,900,000," which she said represents roughly an additional $700,000 of revenue compared with assumptions used in prior amendments.

At the same time, Mrs. Smith said elements of the governor’s proposed budget will be offset by higher employer retirement costs. The governor’s proposal includes a $392 increase in the foundation allowance that would bring it to $10,000 per pupil, but the district’s presenter said rising retirement-related costs will likely consume much of the increase. Key figures cited by the district included:

- Pension normal cost rising from 9.15% to 10.87% effective Oct. 1, 2025. - Health normal cost for employer contributions increasing from 1.25% to 3.83%. - A projected offset in the district’s budget of roughly $2,000,000 tied to these retirement-rate changes.

Board members pressed the point that the headline foundation allowance increase can overstate the net benefit after employers’ retirement costs are taken into account. Vice President Frank said the net effect reduces the benefit and expressed disappointment with the state’s approach, saying it "does come out of kids" when increased employer costs reduce usable funding for classrooms and services.

Separately, during the finance committee portion of the meeting the district proposed continuing a staff-recognition merchandise program. Mrs. Smith requested authority to proceed to next week’s regular board meeting with a recommendation to allocate $60 per staff member for district spirit merchandise through the vendor MBS. She said the program is budgeted in the general fund and that the $60-per-staff request—at roughly 2,000 staff—would equal about $120,000; she noted actual uptake typically is lower (an approximate participation estimate given was about 1,600–1,700 staff).

No formal funding approvals were made Monday; the merchandise allocation and construction contract award recommendations discussed during committee meetings were scheduled to be brought to the regular board meeting for formal action.