I move the Board of Education to approve the Special Revenue Funds  Amendment One, as presented.

Special revenue funds are governmental accounts used to account for revenues that are restricted, committed or assigned for a specific purpose, distinct from the district’s General Fund. Bloomfield Hills Schools’ special revenue funds include the Food Service, Community Services, Co-curricular Endowment, Hills Activities, International Academy and Center Program funds.

The adopted budget was prepared on certain assumptions. As these assumptions change, budget adjustments are required. The attached Statement of Revenue, Expenditures, and Changes in Fund Balance for the Special Revenue Funds shows the budget comparison by functional or department area, comparing the amended budget against the original budget adopted in June, 2025. A statement
“by object” is also provided for most funds that shows costs by type of activity.

The Food Service Fund is funded by state and federal source revenue derived from school breakfast and lunch claims as well as some a-la-carte student sales. All students in the state continue to receive free breakfast and lunch in 2025-26. Revenue and expenditures have been adjusted to reflect current participation and claims. The 2025-26 budget includes capital outlay for cafeteria line equipment at
Eastover and Lone Pine Elementary Schools originally approved for purchase form the Bond Funds. Approval of this amended budget assumes approval of the reallocation of the costs to the Food Service Fund. The Food Service Fund is limited to carrying a fund balance equivalent to three (3) months average expenditures. The current fund balance exceeds this allowable fund balance. Accordingly,
expenditures are expected to exceed revenues while we execute a spend down plan to reduce fund balance, investing proceeds back into the food service program.

The Community Services Fund is supported by fees for services and programs and includes three cost centers – Community Recreation, Bowers Farm Recreation, and Nature Center Recreation and Community Recreation. Total budgeted revenue has been reduced by about $67,000 to reflect current year recreation offerings and participation. The associated expenditures to operate the various programs have been adjusted and decreased, too, by about $47,000. The Community Recreation
program operates at a surplus, and the recreation programs at the Farm and Nature Center continue to operate at a loss, subsidized by the profits of the Community Recreation Program. In 2025-26, a transfer out of $125,000 to the General Fund is assumed to cover indirect costs of operating the various programs.

The Co-curricular Endowment Fund is financed by contributions to the district, and the fund balance is restricted for the use of sustaining or enhancing athletic programs. The 2025-26 budget includes the track renovation project at Bloomfield Hills High School. The remaining fund balance will be used in 2026-27 to partially fund the resurfacing of the tennis courts at Bloomfield Hills High School.

The Hills Activities Fund is used to record student activities and is supported by fundraising revenue earned by student groups. GASB 84 required school districts to absorb these funds into their financial statements several years ago. The expenditures out of these funds are typically consistent with the funds earned. Budgeted revenues and expenditures have been adjusted to reflect prior year activity.

Bloomfield Hills Schools is the fiscal agent of the central (Okma) campus of the tri-campus International Academy. The International Academy Fund is used to record the operations of the central campus. The central campus program is a cooperative of ten districts in Oakland County. The fund is financed by tuition payments from participating districts and fees. The tuition rate to districts follows the State’s
foundation allowance plus ten (10) percent ($11,055 for 2025-26). Adjusted revenue for the 2025-26 year is consistent with revenue assumed in the adopted budget with a modest increase of about $50,000. Enrollment as of the October count day, used for billing purposes, is 576 students, a reduction of 5 students compared to 2024-25. Expenditures have been increased by $215,000 to account for salaries and benefits related to contracts negotiated and settled after the adoption of the original budget, which vary by district. Expenditure adjustments will be required for the 2026-27 school year to close the structural gap between the program’s revenue and expenditures.

The Center Program Fund records the financial activity of the 3 center programs the district operates for Oakland County school districts through intermediate school district (the ISD) including the SCI and SXI programs at Wing Lake and the DHH program. The Center Program Fund is supported by state aid and tuition payments. The budgets for all three programs are approved and monitored by Oakland
Schools and reflect current student and staffing needs. The capital outlay budget for 2025-26 has been reduced to remove the purchase of special education busses dually approved by the BOE in 2025 using Sinking Fund or Center Program funds. Sinking Fund dollars will be used for the purchase of the busses with the passage of the 1.5 millage, and the amended budget assumes the allocation of the purchase to the Sinking Fund. A transfer of $2 million to the General Fund is included for the 2025-26 year to cover unfunded special education costs assumed in the General Fund. The Center Program agreement with Oakland Schools requires center program carriers to maintain a minimum 7% fund balance (of prior year expenditures).