Birmingham - 3-YEAR Budget & Audit Review

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LADY BUDGETDOWN | BIRMINGHAM PUBLIC SCHOOLS

THREE YEARS OF BUDGETS & AUDITS: WHAT DOES THE LEDGER SHOW?

Lady Budgetdown reviewed three completed fiscal years of Birmingham Public Schools' General Fund budgets and audited financial statements: 2022–23 through 2024–25.

There are positives in the ledger. There are also a few things worth watching.

Over those three years, Birmingham recorded three consecutive General Fund deficits:

2022–23: approximately −$231,000
2023–24: approximately −$1.12 million
2024–25: approximately −$2.13 million

Over the same period, General Fund balance declined from approximately $19.71 million entering 2022–23 to $16.22 million at June 30, 2025, a reduction of roughly $3.5 million, or 17.7%.

That downward trend is worth watching. But there is important context on the other side of the ledger.

Birmingham originally budgeted deficits in all three years, and each actual year-end result came in better than originally projected.

For example, Birmingham originally anticipated a roughly $3.4 million deficit in 2022–23. The actual deficit was approximately $231,000.

In 2024–25, the district originally budgeted approximately a $3.01 million draw on fund balance. The actual reduction was approximately $2.13 million.

So while Birmingham has been drawing down its General Fund balance, it has consistently performed better than its original deficit projections.

🔎 WHAT DID THE AUDITORS FIND?

Birmingham continued receiving unmodified audit opinions on its financial statements, commonly referred to as clean audit opinions.

However, the 2022–23 audit identified a material weakness in internal control over financial reporting.

The auditors found that Birmingham did not have an adequate year-end review process in place before the audit began. Accrued liabilities related to Section 147c retirement contributions were understated, requiring an approximately $2.3 million audit adjustment to increase accrued retirement contributions and retirement expenditures.

Management accepted the finding and said it would develop year-end closing procedures to ensure all accruals and required entries were properly recorded.

Importantly, those audit adjustments were corrected by management and incorporated into the final audited financial statements.

And the next year's audit matters too:

The 2023–24 audit did not report a material weakness in internal control over financial reporting or a financial-statement audit finding.

In other words, the 2022–23 material weakness belongs in the ledger, and so does the fact that it did not repeat in the following year's financial-statement audit.

For 2024–25, Birmingham again received an unmodified audit opinion.

That year's audit also noted that several General Fund functions finished above their final appropriations. That's worth noting because Michigan budget law requires districts to maintain expenditures within authorized appropriations.

🪶 SO WHAT DOES THE THREE-YEAR LEDGER SAY?

Birmingham has recorded three consecutive General Fund deficits, and its fund balance declined by approximately $3.5 million over the period.

That's worth watching.

At the same time, Birmingham outperformed its original deficit projections each year, continued receiving clean financial-statement audit opinions, and the material weakness identified in 2022–23 did not repeat as a financial-statement finding in the following audit.

Those facts matter too.

Because reviewing a district's finances isn't about deciding beforehand whether the numbers should look good or bad.
It's about reporting what the ledger actually says.

Sources: Birmingham Public Schools audited financial statements and General Fund budget documents, FY 2022–23, FY 2023–24 and FY 2024–25.

With receipts and respect. 🪶