The Nashwauk-Keewatin School Board convened for its regularly scheduled meeting on Dec. 20 and officials were presented with the results of an audit by Jennifer Smith of Wipfli, a Duluth-based firm hired to perform the audit. The state requires that each school district be audited once per year with the results forwarded to the department of education and the state auditor.
Smith began her presentation by issuing an opinion on the basic financial statements of the district. Smith said that her firm was giving the district an unmodified opinion meaning that the financial statements of the district appear to be true and correct. “A reader can rely upon those statements to be a true and accurate representation of the district’s finances,” she said.
When looking at management and compliance of two federal programs - food service and special education, Smith reported that two irregularities were found. Smith said that of the 40 children tested, four children receiving free and reduced priced meals were ineligible. In the second deficiency, the auditors found that the district’s verified applications on file did not match the verification summary submitted to the Minnesota Department of Education.
Four non-compliance issues were discovered when the firm looked at compliance with state statutes. These infractions consisted of failing to obtain a broker certification from a broker, failing to file a report of outstanding indebtedness, failing to obtain a contractor’s withholding affidavit, and failing to document newspaper advertisements for bids on a contract that exceeded $100,000.
Smith next turned her attention to the various funds that the district manages. With respect to the general fund, Smith said that the district had revenues for fiscal year 2017 of $8,889,799. Total expenditures were $8,816,926 leaving an excess of $72,873 to contribute to a final fund balance of $1,654,478.
Total revenues for the year in the food service fund were $389,057 and total expenditures were $372,886 leaving an excess of $16,171. The final food service balance is $114,203. Smith said that some of the final balance was “non-liquid,” such as inventory.
Smith moved on to discuss the community service fund where revenues were $104,103 and expenditures were $101,300 leaving an excess of $2,803. Smith reported the final fund balance as $56,452.
Smith noted that the debt service was new and previously debt was paid from the general fund.
“The new fund will account for the general obligation facility maintenance bonds that were issued in 2017” said Smith, adding, “As principal and interest come due on those bonds it’s going to be paid from this fund.” Smith said revenues of $577 were generated from interest and expenditures of $13,063 were related to the issuance of the debt. Smith said that $13,063 was transferred into this fund from the construction fund leaving a balance of $577.
Another new fund is the building construction fund. Smith said that this fund was established to manage the proceeds from the bond sales. The balance in this fund is $41,352,203 which includes the transfer of $13,063 to the debt service fund.
The final fund discussed was the OPEB debt service fund. Smith indicated that the balance of the fund was $2,026,950 but the fund would show a drastic reduction once money in an escrow account was used to retire refinanced bonds.
At the conclusion of her presentation, Smith asked for input. Board Director Barb Kalmi asked how common it was to find four instances of non-compliance under one category. Smith said that four was “kind of a lot.” Kalmi asked if it could be due to lack of oversight. Smith would only say, “perhaps.”
In other business, the board:
• Set the date of district’s organizational meeting to be coincident with the regular meeting on Jan. 17.
• Voted in favor of allowing students in grades 7-12, who have student identification, free admission to home games. Younger students who are accompanied by a paying adult also will be allowed free admission.
• Accepted the low bid of $35,600 from Hawk Construction for the remodeling of the teacher’s lounge at NKHS.
• Accepted the low bid of $87,900 from Hawk Construction for refurbishing old pool finishes at Nashwauk High School.
• Accepted the first reading of policy 509: Enrollment of non-resident students.
• Approved posting one elementary special education position.
• Approved the 2018 levy in the amount of $834,883.
• Approved the wellness policy.
• Expelled an unidentified student.
• Hired two basketball coaches, one teacher, and accepted the resignation of one coach.
• Hired an interim high school principal to be compensated at a rate of $80,000 per year.