The ISD 318 School Board convened its regularly scheduled meeting on Monday, Dec. 18 at the administration building. Jennifer Smith from Wipfli in Duluth was on hand to deliver the district’s audit. The district is required to submit an audit to the state auditor and department of education by the end of December every year. Smith said that the purpose of an audit is to render an opinion on the financial statements of the district.
The first half of Smith’s report was broken down into four sections. In the first section, she issued an opinion on the District’s financial reporting. Smith said that the audit contains an “unmodified opinion,” which she characterized as an opinion grounded in the belief that the district’s financial statement are true and correct and can be relied upon by outside readers to be an accurate representation of the district’s finances.
The second section centered around internal control over financial reporting. Smith said that her firm issued a material weakness as it relates to material audit adjustments. Smith said that in the course of the audit, it was necessary that her firm propose to the district significant adjustments in order to arrive at the unmodified opinion she referenced earlier in her presentation.
There was also a material weakness in performing timely bank reconciliations. Smith said that it was an integral control that the district reconcile its bank accounts on a monthly basis and within 30 days of month’s end. She noted that the district had fallen behind in performing regular bank reconciliations. Smith said that she had to propose significant adjustments to the district’s bank reconciliation practices to arrive at the unmodified opinion.
The third portion of Smith’s presentation dealt with compliance and internal controls over federal programs. Specifically, the firm tested Title 1 and special education funding. Smith said her firm did not discover any irregularities over the use of those federal dollars.
The last portion of the presentation concentrated on state statutes. Smith said that there were no non-compliance issues in connection with state statutes.
Smith moved on to talk about the district’s funds. For fiscal year 2017, the district had revenues of $47,992,552 in its general fund while total expenditures for the same time period were $49,997,486, a difference of $2,004,934. Smith said that the deficit reduced the general fund balance to $9,851,726.
Food service fund revenues exceeded expenditures by $87,775, increasing the fund’s balance to $531,525.
In the community service fund, revenues exceeded expenditures by $67,477 for fiscal year 2017, leaving the fund with a balance of $323,656.
Smith noted that the district has two debt service funds. In the first fund, expenditures exceeded revenues leaving the district with $566,397 to pay for middle school bonds. That fund will go to zero when the district makes its final payment on Feb. 1, 2018.
The second debt service fund is for OPEB bonds or post-employment bonds. This fund has a balance in excess of $30,000,000, however $29,966,485 will be used to retire old bonds, leaving approximately $446,995 to pay off bonds that were refinanced at a 2 percent interest rate. Those bonds will be paid off in 2025.
The final fund Smith discussed was the building construction fund. She said that normally expenditures from the fund are reimbursed and that the fund has a balance of zero but in fiscal year 2017 the board voted to spend funds from the general fund to complete construction at the Reif Center resulting in the deficit to the general fund.
At the conclusion of Smith’s presentation, Board Director Pat Medure asked the District’s Business Manager, Pat Goggins, when the district could expect a policy on bank reporting. Smith intervened, saying; “Perhaps policy is the incorrect word but an internal control procedure would be more appropriate to ensure that this is done.”
In other business, the board:
• Approved the 2017/2018 and 2018/2019 Service Employee Association contract.
• Approved the 2017/2018 & 2018/2019 Educational Support Professionals (ESP) contract.
• Accepted the 2016/2017 Audit Report.
• Approved the Final 2017 Payable 2018 Levy.
• Approved a resolution establishing combined polling places for special elections.
• Approved a resolution for School Trust Lands.
• Adopted two resolutions to fully fund Special Education services.
• Accepted the second reading and approved revisions to Policy 418: Drug-Free Workplace / Drug-Free School.
• Accepted the second reading and approved revisions to Policy 805: Waste Reduction and Recycling.
• Accepted next steps in literacy planning.
• Discussed a timeline to fill a school board vacancy.