The Milan Area Schools Board of Education hosted a community forum focused on explaining how the district is funded and the limits placed on how those dollars can be used.
The Feb. 10 “Big Red Board Chat,” held at Symons Elementary School, centered on school finance in Michigan, including revenue sources, restricted funds, and challenges related to state budgeting timelines.
Board President Thomas Faro, Vice President Carrie Karvonen-Gutierrez, Trustee Andrew Cislo, and Superintendent Ryan McMahon led the presentation. Cislo described the event as possibly the most well-attended board chat to date.
Faro began by outlining the district’s three primary funding sources: state, local, and federal. The largest share of operating revenue comes from the state through the foundation allowance, a per-pupil funding model currently set at $10,050 per student.
Because funding is tied to enrollment, changes in student numbers directly affect revenue.
“If we lose 100 students, you’re losing over a million dollars in revenue,” Faro said. “That has an impact on your budget.”
Board members emphasized that many revenue streams are legally restricted. In 2024, Milan voters approved a sinking fund expected to generate about $1 million annually for infrastructure projects such as roofs, parking lots, and HVAC systems. Those funds, Faro said, cannot be used for salaries, wages, or classroom expenses.
Karvonen-Gutierrez cited mold remediation at Paddock Elementary as an example of how restrictions can affect the general fund. Because the work did not qualify for sinking fund use, she said, the cost had to be covered by general operating dollars.
Superintendent McMahon addressed federal grant requirements, including the “supplement, not supplant” rule, which prohibits districts from using grant money to replace existing general fund expenses.
“You can supplement your programs, but you can’t supplant them,” McMahon said, noting that grant rules can change and add complexity to budgeting.
Board members also discussed challenges created by the state’s budget timeline. While districts must adopt their budgets by June 30, the state did not approve its own budget until October 3 last year.
“It was a bit odd, a bit scary, because we just had no idea what we were going to secure,” Faro said.
Karvonen-Gutierrez added that districts often must make financial decisions before knowing final state allocations, requiring estimates and, at times, short-term borrowing to manage cash flow.
To help manage uncertainty, the district maintains a fund balance. The audited fund balance for Milan Area Schools is approximately 10.45%. Faro said that excluding funds designated for the Paddock Early Childhood Center lowers that figure to about 8.21%, below the board’s target of 10%.
The board also addressed the state’s announced $442 per-pupil funding increase for the current fiscal year. Faro said mandatory cost increases, including higher pension contributions and the loss of a retirement cost offset, reduced the net gain to about $247 per student, or roughly 2.5%.
“Everything is costing everybody more,” Faro said.
McMahon said funding challenges have persisted for decades. “We were underfunded 25 years ago,” he said. “We’re really underfunded now.”
The forum concluded with a question-and-answer session that included discussion of career and technical education programs and enrollment trends.
The board announced that the next Big Red Board Chat is scheduled for April and will focus on board service and the upcoming election.
Featured photo: (L-R) Milan Area School Board members Cislo, Karvonen-Gutierrez, and Faro. Photo by Heather Finch
8123 Main St Suite 200 Dexter, MI 48130
