School District One in strong financial condition

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Audit report detailed

By David Meade – Greene, Finney and Horton Auditor Ken Meadows presented the following information on the School District One annual audit for the period ending June 30, 2016: Meadows reported to the District One School Board last week that the District received an “Unmodified Opinion” which is “the best opinion the school district can receive.”

According to Meadows, highlights from the audit showed the General Fund Balance increased by $2.7 million to $14.1 million. The Local Option Sales Tax generated $6.8 million for the district. Of that, $1.3 million went to Debt Service and $5.5 million Capital Projects. Meadows said the District has an unassigned fund balance of $13.9 million which is 21 percent of budgeted expenditures for 2017. The GFOA recommend a minimum of 16.7 percent, or two months. Meadows said District One was below that minimum in 2013-14, right at it in 2015 and 2016 is above. “It is a good trend to recover,” he said.

General Fund revenues were higher than budgeted for 2016 at $62.7 million, primarily from an increase in property taxes of $572,000 to $18 million total. State funding increased by $2.3 million to $43.9 million. The remainder of the GF revenues amounted to $728,000 from other sources.

The District had revenues of $1.6 million more than was budgeted: $964,000 in state government, $303,000 in property taxes and $293,000 other revenues.

Expenditures for 2016 were $61.7 million.

Of that, $38.6 million went to instruction; $21.3 million to support services and $1.8 million in other expenditures.

General Fund expenditures were up 3.3 percent increasing by $1.9 million over 2015.

The increase was due to an increase in instruction salaries and benefits of $550,000; and support salaries and benefits of $380,000 which was $1.1 million less than budgeted. The district had $988,000 in capital outlay projects.

The Capital Projects fund has a $5.2 million fund balance which is from the local option sales tax.

The Debt Service Fund had a $3.5 million fund balance.

Special Revenue funds had a $2 million carryover at the end of the year. The funds are restricted in how they can be spent for 30 special programs and 21 EIA programs.

Food Service had a fund balance of $1.8 milion, an increase of $43,000 over last year.

Total Capital Assets for District One amount to $116.4 million, a decrease of $2.6 million since June 30 of 2015.

Current year additions amount to $2.2 million, equipment and technology $1.1 million, building and improvements $701,000 and land $372,000.

Depreciation for the current year amounted to $4.8 million.

$5 million of the local option sales tax was available for capital projects as of June 30, 2016.

Total debt outstanding was $74.7 million, a decrease of $5.8 million byprincipal payments during 2016.

Total debt service for 2017 is expected to be $8.1 million or $5.5 million on principals and $2.7 million on interest.

District One has $5 million in bonded debt subject to the eight percent limit of $15.4 million and could issue up to $10.4 million of additional debt without a referendum if they choose to do so.

Meadows also reported on the Governmental Accounting required by GASB #34. According to Meadows, if the District was operating as a business, GASB#34 shows $92 million in revenue to $84 million in expenses, which would show an $8 miilion profit.

GASB 68 and GASB 71 also required the school district to reflect accounting and financial reporting for pensions.

Net pension liability for District One amounts to $78.1 million, an increase of $1.2 million.

There were no material weeknesses or deficiencies found. One management letter addressed school bookkeepers and the lack of segregation duties.

Overall, School District One has a strong financial condition as of June 30, 2016, Meadows said.