The Grand County School District (GCSD) has resolved its bookkeeping problems and accounts are in order, but the district continues to face financial shortfalls resulting from years of undetected financial mismanagement, according to an audit for the fiscal year ending June 30, 2010. The report, completed by Squire and Company, an Orem, Utah-based auditing firm, was presented to the Grand County Board of Education last week.
“You still have a lot of challenges but I think you’ll do well. I think it looks good,” said Ray Bartholomew of Squire and Company, in presenting his findings to the school board at the Jan. 19 meeting. “I’m not allowed to give you a grade, but if I could I would probably say you’re in the B, B-plus, A-minus range – not perfect but you’re doing a good job and you’ve come through some difficulty.”
Bartholomew added that all school district funds for the 2009-2010 fiscal year had come in within budget except the student activities fund, which exceeded budget by $362,991.
“I don’t see it as a problem though, so don’t give that too much attention,” Bartholomew said.
Consultant Richard Clark, who helped GCSD sort out its bookkeeping problems, said this week that the student activities fund reflects all the fees and other monies paid to each of the district’s schools and the money those schools pay out for various activities and programs. Until the 2009-2010 budget year, school districts were not required by the state to provide budget information for the activity funds of each school, Clark said.
“Once the state required a budget be set for each of them, we just had to guess at the amount,” Clark said. “So if there’s a budget overage shown in the audit it’s because I guessed too low. It means the schools had more money coming in [from fees] than I estimated so they had more money to spend on the various programs and activities.”
Clark said the final student activity fund figures from the 2009-2010 year will help GCSD better estimate those budgets in future school years.
Bartholomew’s primary concern was the district’s need for secure, long-term funding overall. He advised the school board to develop an “economic stability fund” that would provide a financial cushion for maintenance and operating costs. Since the deficit was uncovered in 2009 the district has had to rely heavily on one-time funds and temporary solutions.
“The challenge I see here is either you have to reduce the service that you provide… or the other choice is to find new resources to be able to meet [the] needs of educating your students,” he said.
Bartholomew said the district had been carrying over resources from previous years to fund over-expenditures and that the designation as a “financially distressed” district has allowed them to temporarily transfer non-operating funds into the general operating fund budget.
“We can’t do that every year. That’s not available to you in the future,” he said.
Bartholomew noted that district funding relies on property taxes and state and federal funding that has grown increasingly unpredictable over the years.
“State funding declined,” he said. “The federal government has come in with some recovery act money to help replace some of that lost state funding, but again, we’re uncertain if that can continue.”
According to Bartholomew 89 percent of school expenditures go towards employees and employee benefits.
“The remainder goes to buses, supplies and classroom activities,” he said.
Bartholomew said that the audit found no instances of noncompliance in the use of state and federal funds and that internal controls were adequate. He added that he thinks that GCSD Business Administrator Robert Farnsworth has been doing a “fine job.”
“In our report to the federal government we indicate that the issues that were raised last year have all been resolved,” he said.
There was an audible sigh of relief from school board members, but as Farnsworth later observed, “It’s not all smooth sailing.”
Superintendent Margaret Hopkin noted that the district will still have to make $700,000 in cuts next school year.
The current audit showed significant improvement from a 2009 State Office of Education report showing the district had several issues to correct including: the incorrect recording of property taxes, inadequate internal controls and payments being made from incorrect funds.