Tecumseh schools budget review finds $1.2M in missing expenses

By DAVID PANIAN

davidp@tecumsehherald.com

TECUMSEH — A review of the 2025-26 budget for the Tecumseh Public Schools has found about $1.2 million in unaccounted expenses.

Because of those and other omissions, the district has a projected budget deficit of $365,182 for the year instead of an expected surplus of $381,918, interim business services director Steve Lenar told the Tecumseh Board of Education at its meeting Monday.

Lenar, who has 45 years of experience as a school finance administrator, was hired in October after former business services director Kelli Glenn resigned following the discovery of a $723,980 discrepancy in the Tecumseh Public Schools’ 2024-25 budget.

The deficit does not mean the district will run out of money. It has enough money in its fund balance to absorb the costs, but the fund balance — the accounting term for the district’s savings — will be reduced instead of growing as was projected when the board approved its budget in June.

New projections

Lenar has spent the past two and a half months getting a handle on the district’s finances. He presented his first budget amendment on Monday.

“The main reasons for these adjustments, I believe, are summarized into two categories: staffing inaccuracies and contract variances,” he told the board.

One of the major omissions Lenar found was in the instructional staff category, where $246,000 was left out of the budget the board approved in June. Most of that was for two long-term staff positions.

“I couldn’t believe my eyes,” he said. The positions were listed in the 2024-25 and 2025-26 budgets, but their compensation of almost $300,000 was omitted from the 2025-26 budget.

Some other adjustments led to the final omitted amount of $246,000.

On the operations side, Lenar and operations director Josh Mattison found the total cost of the district’s new custodial contract was underfunded by nearly $265,000. It was supposed to have been more than $1,050,000 but only $785,000 was budgeted.

Discussions with other department heads found other discrepancies. For example, the cost of the new math curriculum was incorrectly funded, Lenar said.

The discrepancy in the 2024-25 budget was in the special education expenditures. The money was spent on services students were supposed to receive, but it was not accounted for in the budget, Hilton said in October. The problem was found by the district’s auditors.

In his review of the 2025-26 budget, Lenar again found special education costs were incorrectly budgeted, this time missing $1,084,543 in expected expenditures in the budget category called “Added Needs” that includes special education. He said the district spent about $3.8 million on special education in 2024-25, yet the original 2025-26 budget projected special education costs to be $2,998,000.

“So we budgeted $3 million this year for something we spent $3.8 million on last year, and special ed costs don’t go down, not by 25% yearly,” he said.

The total amount budgeted for Added Needs in 2025-26 was $4,076,664. The new amount is about $5.1 million.

Board member Darin Miller asked what was the difference in the 2024-25 actual spending for Added Needs and the 2025-26 amount when the board approved it in June.

“The $4 million had to look reasonable with the information at that point,” board secretary Jacob Martinez said.

“How do we go back and look at how that was missed?” Miller asked. “…Because otherwise I don’t remember it even sticking out like that. It had to have stuck out.”

Lenar did not have the original 2025-26 budget immediately available. According to the 2025-26 budget posted to the district’s website, the audited actual spending for Added Needs in 2023-24 was $4,433,474. The original Added Needs budget for 2024-25 was $4,272,312. The first amendment during the year reduced that to $4,023,907. The second and final amendment increased it to $4,552,879. The board approved $4,076,664 for 2025-26 in June. The higher, audited figure of $4.9 million wasn’t available when the budget was approved.

The new cost projections he’s developed seem to make more sense based on last year’s actual spending, Lenar said.

“And, obviously, we’re going to continue to watch it as we go through the year, and we’ll make adjustments to it as we go forward,” he said. 

Additional revenue

The district is projected to receive about $1.05 million more in revenue, mostly from additional state aid, than was included in the budget. That’s due to the Legislature and Gov. Gretchen Whitmer agreeing to increase the per-pupil funding amount. That didn’t happen until October, or about 90 days after the board approved its budget.

School districts have to approve their budgets by June 30, but the state doesn’t have to approve its budget until Sept. 30, and this year didn’t finalize its 2025-26 budget until Oct. 3.

While the $1.05 million would seem to make up much of the budget variances Lenar uncovered, almost $566,000 of it is allocated to specific spending. For example, more than $200,000 had to go into the school employees’ retirement system. 

“This million dollars wasn’t a million dollars that we could just go out and spend on whatever we wanted to. It was tied to different grants or funding,” Lenar said.

Fund balance calculation

While the fund balance is expected to shrink, the district’s finances won’t be in danger of coming under the scrutiny of the state, Lenar said.

Through this budget review process, district officials discovered the way the state calculates a district’s fund balance is different from how Tecumseh has been doing it. While Tecumseh has based its calculation on its overall general fund expenditures, Lenar said, the state only looks at the unrestricted revenues, or the district’s funding that it can spend however it wants. It excludes the revenues that are tied to specific programs or state-mandated spending.

Under the district’s previous calculation, after adjusting the 2024-25 budget for the missing $723,980 in expenditures, the fund balance was 8.21% of the general fund expenditures, Lenar said. Under the state’s calculation, the fund balance was 10.99% of unrestricted revenues.

Using the state’s calculation, the district’s fund balance at the end of 2025-26 should end up at about 9.35% of the expected unrestricted revenues, which is more than the 5% where the state takes notice of a district’s finances, Lenar said.