MINNEWASKA SCHOOL DISTRICT #2149 AUDIT HIGHLIGHTS YEAR ENDED JUNE 30, 2013
CURRENT YEAR SUMMARY • Audit Opinion- “Unqualified Opinion” audit report Pages 2-3 District’s Financial Position Improving!
Fund Balance Classifications Fund balance is divided into five classifications: • Nonspendable Not in spendable form • Restricted Fund balance is reported as restricted when constraints externally imposed • Committed Can be used only for the specific purposes imposed by a formal action (resolution) of the School District Board of Education • Assigned Intended to be used by the School District for specific purposes • Unassigned All spendable amounts not contained in the other classifications
Current = Aprox. $1 million Ideal = Aprox. $2 million
Debt Relief Solution #1 "A budget tells us what we can't afford, but it keep us from buying it." — William Feather
The property tax shift is an accounting entry that takes a portion of the school district's property tax revenue and moves it forward one fiscal year, i.e., taxes that would otherwise be revenue for fiscal year 2014 are shifted into fiscal year 2013. This shift replaces state aid that will be repaid at some future date. The property tax shift requirement is in Minnesota Statutes, section 123B.75, subdivision 5.
: POST EMPLOYMENT SEVERANCEBENEFITS Early Retirement Incentive (Severance) Plan • In less than 3 years OPEB Fund will have no assets remaining . The District has reserved and committed fund balance to cover this liability. The District’s annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation are as follows Post-Employment Insurance Benefits
Prior Year Follow up Corrected Deficiency 2012-1 Ineligible students were being provided services by Title I teachers Deficiency 2012-2- Controls did not detect that ineligible students were receiving free and reduced meals & some students should have received free and reduced benefits, but didn’t. Deficiency 2012-3 – Documenting Time Charged to Federal Programs Work in Progress Deficiency 2012-4 – Period End Financial Reporting Process
The audit requires separate reporting on our consideration of Internal Controls and Compliance. Control deficiency is when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions to prevent or detect financial misstatements on a timely basis. Material Weakness Reasonable possibility that a material misstatement of the financial statements will not be prevented or detected by the District’s internal controls. Significant Deficiency Deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance."
CURRENT YEAR SUMMARY • Internal Controls & Compliance Reporting Pages 65-66 MATERIAL WEAKNESS Deficiency 2013-1 Day Treatment Billings. Page 70 SIGNIFICANT DEFICIENCY Deficiency 2013-2 – Period End Financial Reporting Page 71 STATE COMPLIANCE Page 69 No performance bond obtained on janitorial maintenance contract • FEDERAL AWARDS COMPLIANCE Page 62 • No deficiencies noted
2013 Conclusions • The District has improved its financial position in the past year. Need to continue to strengthen its fundbalances. • The District needs to continue to closely monitor its accounting for revenues & expenditures related to Day Treatment & Special Ed. Billings need to be done in a timely manner with proper oversight. Once payments for the prior year are finalized the current year budget should be reviewed as actual receipts can vary from estimated receipts. • The District needs to monitor its rising unfunded OPEB actuarial accrued liability and consider how it is going to fund the coming deficit. Also consider using General Fund assets instead of OPEB assets for future retirement incentives. • The District needs to balance the need for capital maintenance with taking on additional debt.
SAS 114 Letter • Thanks to the District Staff for their cooperation during the audit.