Recommendations for minor improvements to the budget were presented to Mackinac Island Public School Board of Education during its meeting Thursday, September 25.

The school, at the end of its fiscal year June 30, had a General Fund balance of $1,306,960, a net increase of $34,008 from the previous year. It also made its annual debt payment of $125,000 for the construction of its new gymnasium in 2001, reported Annette Eustice of Rehmann Robson, the school's auditor from Cheboygan.

Mackinac Island Public School's fund equity, also known as a "rainy day fund," contains nearly $1 million, about 67% of its operating budget, which, said Mrs. Eustice, is equivalent to a year's worth of expenses for the school. This means the school, if necessary, could operate for a year without any revenue.

Rehmann Robson had to implement 13 new auditing standards for all of its clients, including the school.

"We had to dig a little more into your systems and procedures and look for areas where you could make improvements in order to make sure your accounting system is strong and stable," said Mrs. Eustice.

Mrs. Eustice noted that the school had implemented a recommendation made six years ago to segregate accounting duties to avoid having one person with too much financial responsibility. The school remedied this by dividing some fiscal duties among school secretary Barb Fisher, the accounting staff of Eastern Upper Peninsula Intermediate School District, and Rehmann Robson.

"You have, to the best of your abilities, mitigated that risk," said Mrs. Eustice, who added that the board consistently reviews checks and signs all checks that amount to more than $500.

"You have as much [oversight] as you possibly can without adding staff," she said.

New recommendations for improvement include making certain that all teacher contracts are signed, confirm transaction invoices are properly signed and documented, create a policy to describe the types of recurring unauthorized payments that may be released prior to the board's approval, and improve the school's collection of outstanding hot lunch accounts by monitoring the accounts monthly. The school holds $3,300 in outstanding debt owed by parents.

Mrs. Eustice suggested the school collect the meal money a month in advance, and carry over any unused money in a student's account to the next month. She said the school should not allow an outstanding bill to go past two months.

The school's annual PA 25 Report for the state's Department of Education was approved. The report provides general information and statistics about the school, and is also used for providing information to families potentially moving into the area.

The board held a public hearing on the subject before its regular meeting, however, no comment was made.

Superintendent Roger Schrock informed the board that it will have to make a decision about the new Internal Revenue Services (IRS) 403(b) plan regulations, involving employee tax sheltered annuities, that schools and public agencies have to comply with by January 1, 2009.

The IRS wants the 403(b) plan to be as monitored and administered as 401(k) plans are because, explained Mrs. Eustice, governmental units such as school districts previously did not have to comply to such regulations, and the plan was not as closely monitored.

Mrs. Eustice explained that it can be an administrative challenge for school districts because the IRS now wants school districts to have a plan, an administrator, and a monitoring system in place to be sure employees with the 403(b) plan are not loaning or borrowing money they should not be, or putting more money in the plan than the IRS allows.

The Kent Intermediate School District has created a Michigan Retirement Investment Consortium and is inviting all school districts to join. The consortium would research the issue for the group and find a third party administrator to monitor 403(b) accounts, which would "alleviate the administrative nightmare" for the school, said Mrs. Eustice.

If the school decides to join, it would pay a one-time fee of $500.

Two questions that need to be answered, said Mrs. Eustice, are how participating employees will be served, where they would go for questions about their annuities, and what other expenses may be incurred by the district.

The board agreed to discuss the issue further and may decide whether to join the consortium at its October meeting.

The Negotiations Committee will review a proposal for services and fees from Thrun Law Firm, formerly Thrun, Maatsch, and Nordberg Law, which currently represents the school. The board has instructed the committee to look at other proposals before renewing its contract.

Discussion to reschedule the board's regular meeting Thursday, December 11, was tabled until its November meeting. Dr. Schrock asked the board to reschedule the meeting so he and his wife can travel to Louisville, Kentucky, to attend their son's graduation from college.