Fisher Building-14111 Floor II W. - Detroit Public Schoolsdetroit.k12.mi.us/admin/transition_manager/docs/2014-Section_9(5)_Report_for_3-Months...Fisher Building-14111 Floor 30 II

Fisher Building-14111 Floor 30 II W. Grand Boulevard Detroit, Ml 48202-2710

April 15, 2015

SUBMITTED VIA E-MAIL

Hon. Kevin Clinton

Treasurer

State of Michigan

430 W. Allegan St.

Lansing, Ml 48933

Dear Mr. Clinton and Mr. Flanagan:

Michael Flanagan

Superintendent of Public Instruction

Michigan Department of Education

608 W. Allegan St.

P.O. Box 30008

Lansing, Ml 48909

Phone: (313) 870-3772 Fax: (313) 870-3726 www.detroitkl2.org

Enclosed for your consideration is the Detroit Public Schools General Fund, First Quarter

Interim Financial Report as required by Section 9{5) of the Local Financial Stability and Choice

Act (Michigan Public Act 436 of 2012 (PA 436)). The report covers the three-months ended

September 30, 2014.

cc: Delores Brown

Tom Saxton

Jeanet Kulcsar

State Representatives

Hon. Brian Banks

Hon. Alberta Talabi

Hon. Wendell Byrd

Hon. Rose Mary Robinson

Han. Fred Durhal, Ill

Hon. Stephanie Chang

Han. LaTanya Garrett

Han. Sherry Gay-Dagnogo

Hon. Harvey Santana

Hon. Leslie Love

State Senators

Han. Coleman Young, II

Han. Bert Johnson

Hon. Morris W. Hood, Ill

Hon. Virgil Smith

Hon. David Knezek

1/29/14

General Fund

First Quarter Interim Financial Report

For the Three Months Ended September 30, 2014

Section 9 (5) Report

l/29/14

•

•

DETROIT PUBLIC SCHOOLS

Interim Financial Report

General Fund


Section 9(5) Report

Table of Contents

Summary Level - Statement of Revenues, Expenditures and Changes in Fund Balance

The summary level reports revenues & expenditures at a high level; the focus is on total

revenues, expenditures and revenues over (under) expenditures

Detail Level - Statement of Revenues

This statement reports revenue at a more detailed level

Detail Level - Statement of Expenditures by Function

This statement reports expenditures at a more detailed level by function

• Detail Level - Statement of Expenditures by Object Level

This statement reports expenditures at a more detailed level by object level

General Fund Estimated Cash Flow- FY 2015 and FY 2016

• Footnotes

This includes explanations for materially Year-To-Date budget variances

• Comparative Graphs

Bar graphs that compare YTD Budget to YTD Actual for each major Revenue and

Expenditure Category

Page

1

2-4

5

6

7-8

9-14

15-24

J/29/14

SUMMARY

Revenues

local sources $ State sources

Federal sources

lnterdistrict sources

Total revenues

Expenditures

Instruction

Support services

Community service

Facilities acquistions and improvement

Debt service

Total expenditures

Revenues over (under) expenditures

Other Financing Sources (Uses)

Other sources

Other uses

Total other financing sources (uses)

Net change in fund balances

Fund balances (deficit), beginning of year (Note 1)

Fund balances (deficit), end of year $


Statement of Revenue, Expenditures and Changes in Fund Balances

for the Three Months Ended September 30, 2014 Section 9 (5} Report

(Note 2)

Original Current YTD Budget

Budget Budget 8/31/2014

105,874,608 $ 91,775,437 s 19,492,473 s 359,205,791 354,939,361 85,207,298

156,156,530 156,156,530 20,311,599

45,477,054 44,961,367 4,579,868

666,713,983 647,832,695 129,591,238

319,100,683 301,866,952 34,185,554

306,035,049 297,669,304 60,196,508

3,709,231 3,679,110 495,471

53,005,586 53,005,586

681,850,549 656,220,952 94,877,533

(15,136,566) (8,388,257) 34,713,705

14,100,000 19,604,461 481,642

(2,343,156) 5,656,844 540,000

16,443,156 13,947,617 (58,358)

1,306,590 5,559,360 � 34,655,347 $

(127,054,182) (93,881,924)

(125,747,592) s (88,322,564)

YTDActual

8/31/2014

17,198,046 $ 82,067,427

24,797,739

11,260

124,074,472

50,898,843

65,780,104

80,650

13,251,337

130,010,934

(5,936,462)

656,593

656,093

500

(5,935,962) $

Note 1: The beginning Fund balance reported is unaudited. The actual Fund Blance at June 30, 2014 will be known in November 2014 when the FY 2014 financial statement audit is completed.

Note 2: The current budget represents the Original Budget plus Budget Amendment 1 (August 13, 2014).

Page 1

Variance Positive %Variance

(Negative) to Positive

YTD Budget (Negative)

(2,294,427) (11.77%)

(3,139,871) (3.68%)

4,486,140 22.09%

(4,568,608) (99.75%)

(5,516,766) (4.26%)

(16,713,289) {48.89%)

(5,583,596) (9.28%)

414,821 83.72%

(13,251,337) (100.00%)

(35,133,401) (37.03%)

(40,650,167) (684.75%)

174,951 36.32%

(116,093) {21.50%)

58,858 100.00%

(40,591,309) 683.82%


Statement of Revenue

General Fund

For the Three Months Ended Septebmer 30, 2014


Variance Positive

(Negative) to %Variance

Original Current YTD Budget YTDActual VTO Budget Positive

Budget Budget 8/31/2014 8/31/2014 Budget {Negative) Notes

REVENUE DETAIL

LOCAL SOURCES Property tax revenue s 77,459,247 s 62,707,656 s 15,676,914 s 13,917,203 s (1,759,711) (11.22%) A

Tuition non resident 108,480 108,480 6,833 34,331 27,498 402.43%

Eamings on investment 31,892 31,892 11,946 2,666 (9,280) (77.68%)

Income from real property 64,080 64,080 8,564 23,361 14,797 172.78%

Community services activities 11,593,043 11,593,043 2,898,326 (2,898,326) (100.00%) A

Rent from school property 3,619,508 4,256,242 437,026 338,676 (98,350) (22.50%)

Community use 255,000 255,000 26,957 12,997 (13,960) (51.79%)

Miscellaneous revenue 12,389,458 12,405,144 272,668 2,863,812 2,591,144 950.29% A

Private donations 353,900 353,900 153,239 5,000 (148,239) {96.74%)

Total Local sources 105,874,608 91,775,437 19,492,473 17,198,046 (2,294,427) -11.77%

STATE SOURCES State school aid 251,490,368 247,223,938 61,805,984 64,281,115 2,475,131 4.00% B

State restricted 70,732,470 70,732,470 17,683,119 11,399,215 (6,283,904) (35.54%) B

Section 31A- program 19,833,953 19,833,953 3,677,671 4,792,956 1,115,285 30.33% B

Comprehensive school health 80,000 80,000 17,761 23,366 5,605 31.56%

Great start readiness program 16,994,000 16,994,000 2,004,358 1,527,175 (477,183) (23.81%) Detroit math & science centers 75,000 75,000 18,405 7,726 (10,679) (58.02%) Adolescent n School Health 6,394 6,394 100.00% Smarr Schools 21st Century 29,480 29,480 100.00%

Total State sources 359,205,791 354,939,361 85,207,298 82,067,427 (3,139,871) (3.68%)

129/14 Page 2



General Fund


Section 9 (5} Report

Variance Positive

(Negative) to '%Variance

Original Current YTD Budget YTDActual YTD Budget Positive

Budget Budget 8/31/2014 8/31/2014 Budget (Negative) Notes

REVENUE DETAIL

FEDERAL SOURCES

Title I Part A 120,066,638 120,066,638 15,072,762 18,938,151 3,865,389 25.64% c

Title 1 Part c 23,345 23,345 4,312 (4,312) (100.00%)

CTE Perkins Title II 3,000,819 3,000,819 645,192 198,053 (447,139) (69.30%)

Adult Ed & Family literacy 60,000 60,000 15,000 (15,000) (100.00%)

Title Ill limited English Proficiency 766,321 766,321 108,828 301,404 192,576 176.95%

Title Ill Immigrant Students 47,809 47,809 5,676 24,236 18,560 327.00%

SIG II Federal thru State 428,747 428,747 100.00%

Title 1 Part D - Intervention 144,886 144,886 17,393 64,060 46,667 268.31%

21st Century Cohort 2,700,000 2,700,000 403,159 445,700 42,541 10.55%

English literacy and Civics Ed 5,000 5,000 500 (500) (100.00%)

Title 11 Part A - Regular Teacher 16,451,385 16,451,385 2,216,077 3,066,827 850,750 38.39%

IDEA Flowthrough Attic 475,000 475,000 70,874 35,759 (35,115) (49.55%)

IDEA Flowthrough - Regular 9,439,709 9,439,709 . 1,466,996 709,848 (757,148) (51.61%)

IDEA Preschool 413,035 413,035 39,536 66,435 26,899 68.04%

Head Start 1,103 1,103 100.00%

Title 1 School Wide Planning 58,108 58,108 100.00%

Improving the Health Education 8,859 8,859 100.00%

WIA ABE AND GED Prep Services 186,698 186,698 100.00%

IDEA Center Program (CPE)/Act 2,562,583 2,562,583 245,294 263,751 18,457 7.52%

Total Federal sources 156,156,530 156,156,530 20,311,599 24,797,739 4,486,140 22.09%

INTERDI5TRICT SOURCES

Charter Schools -Serv Provided 3,303,574 2,787,887 506,692 (506,692) (100.00%)

WCRESA-Follow That Child 1,441,716 1,441,716 0.00%

WCRESA ACT 18 40,731,764 40,731,764 4,073,176 (4,073,176) (100.00%) 0

Transportation Revenue - Other Schools 11,260 11,260 100.00%

Totallnterdistrict sources 45,477,054 44,961,367 4,579,868 11,260 (4,568,608) {99.75%)

129/14 Page 3

REVENUE DETAIL

OTHER SOURCES

Sale of real estate

Sale of equipment

Transfer In

Total Other sources

Total Revenues and Other Sources

129/14

$

Original

Budget

11,600,000

100,000

2,400,000

14,100,000

680,813,983



General Fund



$

Current

Budget

17,204,461

2,400,000

19,604,461

667,437,156 $

YTD Budget

8/31/2014

481,642

481,642

130,072,880

Page4

$

YTDActual

8/31/2014

500

656,093

656,593

124,731,066 $

Variance Positive

(Negative} to

YTD Budget

Budget

(481,142)

656,093

174,951

(5,341,816)

%Variance

Positive

(Negative)

(99.90%)

0.00%

100.00%

36.32%

(4.11%)

Notes

FUNCTION LEVEL EXPENDITURES

INSTRUCTION

Elementary Programs (111,114, 118) $ Middle School Programs (112) High School & Summer Programs (113,119)

Special Education (122) Compensatory Education {125) Career and Technical Education (127) Adult/Continuing Education- Basic (120, 13x)

Total Instruction

SUPPORTING SERVICES

Pupil (21x) Instructional Support (22x) General Administration (23x)

School Administration (24x)

Business (25x) Maintenance & Operations (261) Transportation (27x) Central Support SeJVices (28x) School Activities {29x)

Total Supporting Services

COMMUNITY SERVICES (3xx)

DEBT SERVICE (Sxx)

TOTAL GENERAL OPERATING EXPENDITURES

OTHER FINANCING USES

Outgoing transfers (Gxx) Total Other Financing Uses

TOTAL EXPENDITURES $

D/29/14


Statement of Expenditures by Function

General Fund


Section 9 (5} Report

Original Current YTD Budget YTDActual

Budget Budget 8/31/2014 8/31/2014

127,238,722 $ 120,431,742 $ 13,602,904 $ 20,457,305

14,089_716 13,811,638 1,627,816 1,505,672

50,663,316 49,245,470 5,132,095 9,163,064

75,006,884 70,888,319 7,346,190 11,488,534

46,686,705 43,973,285 6,094,258 7,580,915

3,405,138 1,586,073 158,607 470,478

2,010,202 1,930,425 223,684 232,875

319,100,683 301,866,952 34,185,554 50,898,843

60,122,328 56,916,710 8,024,599 8,049,791

58,557,176 52,902,896 8,466,668 10,053,745

6,830,748 6,659,402 1,604,863 1,713,741

35,279,744 33,158,634 7,023,836 7,238,015

12,828,933 12,409,389 2,147,561 2,127,705

78,049,928 81,518,181 19,618,942 24,167,968

26,910,502 26,783,987 6,573,176 5,367,212 26,474,558 26,013,334 6,411,385 6,893,347

981,132 1,306,771 325,478 168,580

306,035,049 297,669,304 60,196,508 65,780,104

3,709,231 3,679,110 495,471 80,650

53,005,586 53,005,586 13,251,337

681,850,549 656,220,952 94,Sn,S33 130,010,934

5,656,844 540,000 656,093 (2,343,156) 5,656,844 540,000 656,093

679,507,393 $ 661,sn,796 $ 95,417,533 $ 130,667,027

Page 5

Variance Postive


YTD Budget Postive

Budget (Negative) Notes

$ (6,854,401) (50.39%)

122,144 7.50%

(4,030,969) (78.54%) (4,142,344) (56.39%) (1,486,657) (24.39%)

(311,871) (196.63%)

(9,191) (4.11%)

(16,713,289) (48.89%) E

(25,192) (0.31%)

(1,587,077) (18.74%) F

(108,878) (6.78%)

(214,179) (3.05%)

19,856 0.92%

(4,549,026) (23.19%) F

1,205,964 18.35% F {481,962) {7.52%) 156,898 48.21%

(5,583,596) (9.28%)

414,821 83.72%

(13,251,337) (100.00%) G

(35,133,401) (37.03%)

!116,093) (21.50%)

(116,093) (21.50%)

$ {35,249,494) (36.94%)

Original

Budget

OBJECT LEVEL EXPENDITURES

Personnel (Sxxxxx & 6xxxxx) $ 463,048,713 $ Purchased Services 117,662,355

Supplies & Textbooks 18,547,708

Equipment & Capital 971.425

Utilities 24,326,230

Other 54,950,962

TOTAL EXPENDITURES $ 679,507,393 $

L0/29/14


Statement of Expenditures by Object Level

General Fund

for the Three Months Ended September 30, 2014


Current YTD Budget

Budget 8/31/2014

433,478,906 $ 59,609,077 $ 124,613.473 26.402,665

18,036,800 3,098,151

971.425 115,758

21,826,230 5,455,749

62,950,962 736,133

661,877,796 $ 95,417,533 $

Page 6

Variance Postive


YTDActual YTD Budget Postive

8/31/2014 Budget (Negative) Notes

81,136,522 $ (21,527,445) (36.11%) H

28,267,828 (1,865,163) (7.06%)

1,762,282 1,335,869 43.12%

10,156 105,602 91.23%

5,580,860 (125,111) (2.29%)

13,909,378 (13,173,245) (1789.52%) K

130,667,027 $ (35,249,494) {36.94%)

Beginning Balance

Cash Receipts

State Aid 32,5'30 31,859 26,655

Property Taxes 45,457 (11,989) (5,224)

Grants 20,730 17,589 5,083 12,835

MPSERS UAAL Rate Stabilizatio 7.402 741 State Aid Note Proceeds

2013 State Aid Note Proceeds 92,000 Other Receipts

WCRESA-Net 3,062 3,062

Food Service-Reimbursement 4,576 2,007 1,001 87

-Deposits 4 8 87 148

-RD 2 RD-Other 1,363 1,408 953 2,498

Interest 3 4

Miscellaneous 234 336 (642) 220

Outreach Medicaid 1,248 1,191 1,089 1,089

Fee for Service Medicaid

EAA Receipts 2,512 3,391 7 229

Total Cash Receipts 70,601 195,990 (1,349) 41,603

Total Available Funds 88,382 217,681 122,047 96,013

Cash Disbursements

Payroll (28,617) (23,709) (20,975) (22,838)

FICA (2,389) (1,523) (1,610) (1,888) Retirement (11.419) (13,616) (17,221) (6,892)

MPSERS UAAL Rate Stabilizalio (7,402) (741) Non-Payroll Expenditures

Fringe Benefits (1,346) (1,099) (1,067) (569) Fringe Benefits-Wired (9.413) (5,098) (7,109) (4,397)

Account Payable (10,785) (10,567) (8,623) (2,540) Additional Account Payable (28,741) (6,128) (6,974)

Food Service Transfer (1,576) (1,978) (3,827) (1,273) Capital Leases

Adult Education (1,145) (337) 2013 State Aid Note COl (552)

Set Aside Payments on Debt

2012 Bonds- Principal (1,939) 2012 Bonds - Interest (655) 2011 Bonds- Principal (2,782) 2011 Bonds- Interest (1,250) 2012A Notes- Principal 2012A Notes- Interest

2013 Notes- Principal

2013 Notes- Interest Total Set-Aside Payments (6,626)

Total Cash Disbursements (66,691) (94,285) (67,637) (53,997)

Ending Balance $21,691 $123,396 $54,410 $42,016

129/14

DETROIT PUBLIC SCHOOLS General Fund Estimated Cash Flow (In Thousands)

July 2013- June 2014

36,944 28,183 30,970 23,934 30,607 2,046 (1,676) 2,336 10,966 1,879

12,537 26,976 13,362 18,096 17,583 3,042 1,522 1,521 1,525 1,522

3,062 3,062 3,062 3,062 3,062 8,876 393 3,814 2,871 206

153 94 41 113 105

2,626 500 990 1,781 3,D43 4 3 1

(2,222) 7,404 926 802 654 1,169 1,089 1,089 1,140 1,089

223 258 129 68,460 67,805 58,243 64,291 59,750

110,476 99,696 87,900 80,914 78,089

(27,640) (22,038) (27,867) (21,567) (22,093) (2,846) (1,856) (1,726) (1,836) (1,849)

(12,725) (8,908) (8,761) (8,241) (2,341) (3,042) (1,522) (1,521) (1,525)

(1,615) (1,042) (1,181) (1,216) (1,003) (4,611) (4,604) (5,621) (5,048) (5,982)

(11,545) (6,316) (15,811) (9,770) (8,627) (5,688) (12,180)

(1,756) (5,286) (3,427) (2,162) (1,500)

(1,939) (1,939) (1,939) (1,939) (1,939) (655) (655) (655) (655) (655)

(2,782) (2,782) (2,782) (2,782) (2,782) (1,253) (1,250) (1,250) (1,250) (1,250)

(6,750) (6,750)

(6,626) (6,626) (13,376) (13,376)

(78,585) (70,039) (71,277) (62,575) (60,052)

$31,891 $29,657 $16,623 $18,339 $18,037

Page 7

25,790 30,490 31,605 329,567 2,805 14,154 22,201 82,955

13,776 12,540 21,894 193,002 1,522 1,522 1,575 21,893

92,000

3,062 3,062 3,062 30,620 3,054 7,504 4,477 38,866

105 133 64 1,055 2

495 1,524 600 17,781 1 2 18

1,097 669 392 9,870 10,193

129 6,877 51,707 71,601 85,998 834,700

69,744 90,331 96,294 852,481

(22,532) (26,252) (22,607) (288,735) (1,882) (2,769) (1,925) (24,100) (2,340) (3,490) (2,357) (98,311) (1,522) (1,522) (1,522) (20,319)

(1,029) (1,076) (1,043) (13,286) (344) (9,865) (5,006) (67,098)

(5,333) (10,789) (13,805) (114,510) (59,712)

(856) (147) (2,759) (1,800) (4,500) (1,500) (28,829)

(1,482) (552)

(1,939) (1,939) (15,515) (655) (655) (5,237)

(2,782) (2,782) (22,252) (1,250) (1,250) (10,007)

(6,750) (13,000) {19,500) (52,750)

(51 ,014) (80,035) (70,799) (826,986)

$18,731 $10,296 $25,495 $25,495

Beginning Balance

Cash Receipts

State Aid MPSERS UAAL Rate Stabilization Property Taxes

Revenue Enhancement Millage

Otber Receipts WCRESA-Net A c t l 8 Food Se<Vice-Reimburs

Deposits RD

Capital Asset Sales Otber Financing Sources

Miscellaneous E-Rate reimbursement Outreach Medicaid

EAA Receipts

Total Casb Receipts

Total Available Funds

Payroll

FICA Retirement MPSERS UAAL Rate Stabilization

Non-Payroll Expenditures

Fringe Benefits Fringe Benefits-Wired

Food Service Transfer

2014 State Aid Cost of issuance

Set Aside Payments on Debt 2012 Bonds- Principal 20 12 Bonds - Interest 20 11 Bonds - Principal 2011 Bonds -Interest 2013 Notes� Principal

2013 Notes-Interest 2014 Notes- Principal

Total Set-Aside Payments

Total Casb Disbursements

E nding Balance

July

$25,495

29,289 1,528

414

289

7,176

129

55,028

August

$9,013

27,715 1,528

(2,738)

1,423

2,700

340

8,623

165,389

September

$51,395

16,075

3,438 396

321

966

31,893

O<:tober

$18,755

29,745 1,492 2,259

3,438 1,695

536

966

51,502

DETROIT PUBLIC SCHOOLS General Fund Estimated Cash Flow (In Thousands)

July 2014 �June 2015

November

$10,426

29,745 1,492

292

3,438 5,684

5,100

2,&49

966

56,100

December

$4,430

29,745 1,492

526

3,438 6,903

5,106

966

78,223

January

$22,813

29,745 1,492 2,347

3,438 1,509

1,358

966

49,942

February $7,096

29,745 1,492

11,016 4,552

3,438 5,111

2,143

966

70,970

Marcb

$15.411

29,745 1.492 1,888 1,511

3,438 5,273

2,088

966

62,319

April

$6,883

35,745 1,492 2,818

666

3,438 2,874

3,072

966

62,632

$1,904

35,745 1,492 5,946 1,404

3,438 8,975

2,034

966

77,961

June

$7,821

35,745 1.492 9,900 6,668

3,438 3,352

1,557

966

83,728

TOTAL

$25,495

342,708 16.482 50,744 14,800

34,382 43,485

7,800

28,581

9,661

845,746

80522.65804 174402.5888 83288.42977 70257.95002 66526.26401 82652.7817 72754.54074 78065.97877 77789.44996 69515.36867 79865.13165 91548.32867 871241.0806

(22,1ll)

(\,801) (2,407) (1,575)

(1,615) (5,598)

{1.7&9)

(19,600) (1,533)

(21,133)

(71,509)

9,013

(30,710)

{1,764) (37,647)

{1,528)

(1,600) (5,894)

(5.000)

(525)

(19,650) (881)

(20,531)

(123.007)

51,395

(20,444)

(1,650) (15,302)

(1,528)

(5,106) (3,697)

(396)

(64,533)

18,755

(23.552)

(2,301) (15.526)

(435) (3.697)

(1,695)

(2,036) (557)

(2.914) (1.118)

(6,626)

(59,831)

10,426

(20,044)

(1,534) (11,023)

(1,492)

(435) (3,697)

(5,684)

(2,036) {557)

(2,914) (1,118)

{6,626)

(62.096)

4,430

(20,044)

(1,534) (11,023)

(1,492)

(435) (3,697)

(6,903)

(2,036) (557)

(2,914) (1,118)

(6,626)

(59,&40)

22,&13

Page 8

(26,559)

(1,534) (15,635)

(1,492)

(435) (3,697)

(1,509)

(2,036) (557)

(2,914) (1,118)

(6,626)

(6S,659)

7,096

(20,044)

(1,534) (7,797) (1,492)

(435) (3,697)

(5,111)

(2,036) (557)

(2,914) {1,118)

(10,000)

(16,626)

(62.655)

15.41!

(1,534) (7,797) (1,492)

(435) (3,697)

(5,273)

(2.036) (557)

(2.914) (1,118)

(12,000)

(18,626)

{70,907)

6,883

(20,044)

(1,534) (7,797) (1,492)

(435) (3,697)

(2,874)

(2,036) (557)

(2,9!4) (1,1 18)

(10,000)

(16,626)

{67,611)

1,904

(23,552)

(2,301) (7,797) (1,492)

(435) (3,697)

(2,036) (557)

(2,914) (1,1 18)

(10,000)

(16,626)

(72,045)

7,821

(20,044)

(1,534) (7,797) (1,492)

{435) (3,697)

(12,327)

(22,000)

(22,000)

(85,825)

5,723

(267,194)

(20,555) (147,549)

(16,565)

(12,236) (48,463)

(4&,561)

(525)

(!6,290) (4,458)

(23,311) (8,947)

(39,250) (2,4!4)

(64,000)

(158,669)

(865,518)

5,723

Detroit Public Schools

Notes to First Quarter Interim Financial Report (Continued) For the three months ended September 30, 2014

Note (1) Summary of Significant Accounting Policies

The accounting policies of the Detroit Public Schools (the School District) conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The following is

a summary of the significant accounting policies used by the School District.

Reporting Entity

The School District of the City of Detroit (commonly known as "Detroit Public Schools"), incorporated in 1842, is a statutory public body created by the State of Michigan, and functions under the provisions of the State of

Michigan's Public Act 451. The District encompasses an area of approximately 140 square miles, and is located

within the City of Detroit, Wayne County, Michigan. Although the corporate boundaries of the District are coterminous with the corporate boundaries of the City of Detroit, the District is a totally separate governmental

unit.

Detroit Public Schools is the largest public school system in Michigan. The District is one of the largest

employers in Detroit, employing 6,535, employees (full time equivalents) as of June 30, 2014.

On May 16, 2011, Governor Rick Snyder determined that a financial emergency continued to exist for the

District and appointed Roy S. Roberts to replace Robert Bobb as EM for the District, pursuant to Public Act 4. Mr. Roberts served as Emergency Manager of the District pursuant to Public Act 4 until August

2012 when Public Act 4 was suspended by voter petition for a referendum and temporarily replaced by Public Act 72. In August 2012, Governor Snyder reappointed Mr. Roberts to serve as an Emergency

Financial Manger for the District under Public Act 72 {during the suspension period and after Public Act 4 was rescinded by voter referendum effective November 6, 2012); and in March 28, 2013, reappointed Mr. Roberts as the Emergency Manager for the District when a subsequently enacted Public Act 436 of 2012 ("Public Act 436") took effect. On July 15, 2013, Governor Snyder appointed Jack Martin to a one

year term to serve as Emergency Manager for the District to replace Roy Roberts who retired as EM on that same date. Under Public Act 436, the EM is prescribed all power and authority over all financial,

operational and academic matters of the District as is necessary to address the financial emergency of the

District, subject to certain limitations enumerated in Public Act 436. Notwithstanding any agreed upon expiration date, the EM serves at the pleasure of the Governor and the Governor has the authority to

remove the EM with or without cause at any time he may determine. The EM may also be removed by impeachment and conviction by the State Legislature. On January 13, 2015, Governor Snyder appointed

Darnell Earley as Emergency Manager to succeed Jack Martin who's term ended January 15, 2015.

Page 9


Notes to First Quarter Interim Financial Report (Continued) For the three months ended September 30,2014

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

Fund Financial Statements

Governmental fund financial statements are reported using the current financial resources measurement focus

and the modified accrual basis of accounting. Revenue is recognized as soon as it is both measurable and

available. Revenue is considered to be available if it is collected within the current period or soon enough

thereafter to pay liabilities of the current period. For this purpose, the School District considers revenues to be

available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are

recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well

as expenditures related to compensated absences and claims and judgments (such as self insurance,

contingencies), are recorded only when payment is due.

Property taxes, unrestricted State Aid, intergovernmental grants, and interest associated with the current fiscal

period are all considered to be susceptible to accrual and have been recognized as revenue of the current fiscal period. All other revenue items are considered to be available only when cash is received by the School District.

General Fund

The General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those required to be accounted for in another fund. The School District maintains

separate sub funds within the General Fund for federal activities, adult education and special education. The

General Fund includes the following sub funds:

Fund

Code Description

11 General Fund- General Purpose

13 Adult Education

14 Grants

16 Center-Based Special Education

18 ARRA Stimulus Fund

19 Consolidated Fund

22 Act 18

Page 10



Note (2) District's Strategic Direction

We are actively working to address the District issues through our 2013-2017 Strategic Plan, "The

Neighborhood-Centered, Quality Schools," available online at http://detroitk12.org/strategicplanning.

L Broaden Services to address students needs

2. Support parents and families

3. Offer broad/high quality programs

4. Improved customer services

5. Create safe learning environments

6. Transform central and school based operations to serve customers

7. Improve technology

8. Minimize the impacts of change

9. Foster school-based leadership

10. Celebrate and promote success

11. Ensure fiscal stability

12. Enhanced attendance and discipline

Funding for several key components of the strategic plan implementation efforts is included in the FY 2014

budget which is a part of this report

Note (3) Interim Financial Reporting and District's Operations Management

In July 2014, The District implemented its new upgrade to PeopleSoft Financials 9.2 which brings significant

enhancements to the District's financial management and reporting system. The District is now in its post

implementation phase which will aid us in improving the interim financial reporting process.

Note (4) Monthly Financial Statements

The financial statements presented reflect data from the District's General Ledger for the six months ended

December 31, 2014.

Page 11



Note (5) Variance Explanations- Function Level

Variance explanations for the Function Level are provided for financial items which have a variance of over $1 million (Refer to page 3):

Description

Local sources

State sources

Explanation

This variance is primarily attributed to the _following revenue:

I. Property Taxes- Property Tax actual revenue is based on the taxable

value times 18 mils minus the estimated chargeback liability. The

current budget is based on prior year Property Tax Revenue

II. Community Services Activities (Medicaid Reimbursement Funding)

- Medicaid Revenue is currently budgeted at $11.5 Million. Based on actual Medicaid receipts, it is estimated that revenue will be

consistent with Fiscal Year 2014 ($4.2 million). This variance is the

result of the District receiving $9 million in excess Medicaid funding

in prior years ($4.1 million in FY 2012 and $ 4.9 million in FY 2013).

Beginning in April 2013, the State began deducting funds towards

the repayment of the $9 million liability. It is recommended that the

Medicaid Revenue budget be appropriately adjusted in a subsequent

budget amendment.

Ill. Miscellaneous Revenue - Actuals recorded for miscellaneous

revenue were more than the budget allocated for the three months

ended. This a timing difference.

This variance is primarily attributed to the following revenue:

1. State School Aid/State Restricted- Actual State revenue is based on the December 2014 State Aid Financial Status Report. The budget does not reflect this current projection. This creates a significant variance for restricted State Revenue since Section 147s MPSERS

UAAL Stabilization is being accrued monthly based on a projected $28 million and the current budget for UAAL is $16.5 million. It is

recommended that the budget be appropriately adjusted in a

subsequent budget amendment.

11. Section 31A - Revenue for Section 31A (Grants) is based on actual expenditures incurred. Actual expenditures incurred exceeded the

budget allocated for the three months ended. This is a timing

difference.

Page 12

Reference

Key

A

B


Description

Federal sources

lnterdistrict

sources

Instruction

Support services

Debt Service


Explanation

Ill. Great Start Readiness Program - Revenue for the Great Start

Readiness Program (Grants) is based on actual expenditures

incurred. Actual expenditures incurred exceeded the budget

allocated for the three months ended. This is a timing difference.

This variance is primarily attributed to the Title I Part A Grant. and Title II A

grants. The actuals includes revenues recognized from both the 2014 and

2015 Grants. The budget includes only the 2015 grant funds.

This variance is primarily attributed to the following revenue:

I. WCRESA Act 18 - Actual WCRESA Act 18 revenue is recorded net of

prior year adjustments per Wayne County RESA's payment schedule.

The Budget for the WCRESA Revenue is recorded at Gross. It is

recommended that the budget be appropriately adjusted in a

subsequent budget amendment.

This variance is primarily attributed to the actuals for the Title I A and Title II

A grants reflecting expenditures for both 2014 and 2015 Grants. The budget

includes only the 2015 grant funds.

This variance is primarily attributed to the following functional categories:

I.

II.

Ill.

Instructional Support- Actuals for the Title I A and Title II A grants

reflect expenditures for both 2014 and 2015 Grants. The budget

includes only the 2015 grant funds.

Maintenance & Operations - Actuals reflect accrued expenditures to date. The budget includes a $12 million PLD (Public Lighting

Department) credit from the City of Detroit. This credit towards

electrical service billings is in exchange for 77 DPS properties being

transferred to the City of Detroit. This credit will be reflected at the

time of closing.

Transportation - Actual expenditures incurred were greater than

budget allocated for the three months ended due to additional

transportation costs from prior year initiatives.

Actuals were incurred for debt service whereas there was not budget


See pages 4 through 7 for more detail reports of the Statement of Revenues and Expenditures.

Page 13

Reference

Key

c

D

E

F

G



Note (6) Variance Explanations- Object level

Variance explanations for the Object Level are provided for financial items which have a variance of over $1 million (Refer to page 8):

Reference

Description Explanation Key

Personnel (Salary This variance is primarily attributed to the actuals for Title I A and Title II A H

and Benefits) grants reflecting expenditures recognized from the both 2014 and 2015 Grants. The budget includes only the 2015 grant funds.

Purchased Services Actuals were incurred for purchased services were more than the budget I


Supplies/Textbooks Actuals were incurred for supplies and textbooks were more than the J

budget allocated for the three months ended. This is a timing difference.

Other Actuals were incurred for debt service whereas there was not budget K


Page 14

$25

$20

$15 "'

r::::

.!2

� $10

$5

$0

10/29/14


General Fund



Local Sources

Property tax revenue Other

Page 15

Total Local sources

$90

$80

$70

$60

"'

c:

.5! $50

� $40

$30

$20

$10

$0

10/29/14


General Fund



State Sources

State restricted Section 31A- program

Page 16

Other Total State sources

$30

$25

$20

"'

c

.5! $15

2

$10

$5

$0

Title I

10/29/14


General Fund



Federal Sources

Title II Title 111 IDEA

Page 17

Other Total Federal

sources

$5

$5

$4

$4

"' $3

r:: 0 $3

:iii $2

$2

$1

$1

$0

'S' YTD Actual

I 7/31/2014

10/29/14

Charter Schools -Serv

Provided

$506,692

$-


General Fund


For the Three Months September 30, 2014

lnterdistrict Sources

WCRESA Follow that child

and

WCRESA ACT 18

$4,073,176

$-

Page 18

Transportation Revenue

Other Schools

$-

$11,260

Total lnterdistrict sources

$4,579,868

$11,260

10/29/14

"' c:

$4

$3

.!2 $2

�

$1

$0


General Fund



Sale of real estate, equipment & Transp Revenue

Other Sources

Transfer In

Page 19

Total Other sources

$481,642

$131

$130

$129

$128

$127 Ill s:::

.5! $126

� $125

$124

$123

$122

10/29/14


General Fund



Total Revenue & Other Sources

Page 20

$60

sso I

$40

"'

s::: 0

$30

�

$20

$10

$0 Elementary

Programs

llliYTD Budget $13,602,904

7/31/2014

iili! YTD Actual $20,457,305

7/31/2014

10/29/14


General Fund



Instruction

Middle School High School Compensatory

Programs Programs I Special Education

Education

$1,627,816 $5,132,095 $7,346,190 $6,094,258

$1,505,672 $9,163,064 $11,488,534 $7,580,915

Page 21

ere! Adult/

Continuing Ed. Total Instruction

$382,291 $34,185,554

$703,353 $50,898,843

10/29/14

"' 1:

.5!

$70

$60

$50

$40

$30

$20

$10

$0


General Fund



Pupil I Instructional General I School

Support Admin.

Supporting Services

Business

Page 22

Maint. &

Operations Transp.

Central Support

Services & School

Activities

Total Supporting

Services

$14

$12

$10

"'

c $8

.5!

� $6

$4

$2

$0

10/29/14


General Fund



Community and Debt Services

Community Services

Page 23

Debt Services

$140

$120

$100

"' $80 1:

.5!

2 $60

$40

$20

$0

10/29/14


General Fund



Total General Operating Expenditures

Page 24

DRAFT

Documents

Fisher Building-14111 Floor II W. - Detroit Public Schoolsdetroit.k12.mi.us/admin/transition_manager/docs/2014-Section_9(5)_Report_for_3-Months...Fisher Building-14111 Floor 30 II