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Audit: NLS has major budget shortfall

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News Willmar, 56201
West Central Tribune
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Willmar Minnesota 2208 Trott Ave. SW / P.O. Box 839 56201

NEW LONDON — The New London-Spicer School Board got their first look at the annual audit of the school district’s finances at the regular board meeting Monday.

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The audit by the accounting firm of Abdo, Eick and Meyers, which will be presented to the board for approval Nov. 12, shows the district has a negative fund balance, due in part to the fact that the district is spending the $1.5 million in technology levy funds approved by voters in November 2011 before the funds are actually received from taxpayers.

The preliminary audit documents show the district has a negative unassigned fund balance of $787,084 as of June 30 of this year. The balance is 5.7 percent of the total general fund expenditures for the fiscal year. The management letter included in the audit paperwork notes that the technology enhancements and facility improvements are the primary reason for the deficit. The auditors also note that the district will be receiving the technology funds over the next two years to offset the majority of the deficit. The auditors also noted that the district’s budget cuts have not kept pace with the declining enrollment of the district, which has dropped 100 students in five years.

The district has received one-third of the technology levy funds, Superintendent Paul Carlson said after the meeting. Under the fiscal reporting system maintained by the State Department of Education, the negative fund balances in the district’s capital funds, including negative balances of $55,714 in deferred maintenance, of $59,650 in health and safety and of $605,757 in capital projects, is not included in the calculation used by the state to determine if the district is in statutory operating debt. A district is in SOD if its negative fund balance is more than 2.5 percent of general fund expenditures and is then required to work with the state to develop and implement a plan to return to financial stability.

Carlson also presented information showing that without those three capital funds, the district’s fund balance is a negative $52,533, or 0.47 percent of expenditures.

“We are cash-flowing the technology levy, that’s what’s causing us to be more negative (in balances),” Carlson explained to the board members during the meeting.

Board chairman Robert Moller asked his fellow board members to make changes now to their travel to meetings and conferences, noting that even making small changes can make a difference.

Moller also noted that the district will be making another round of budget cuts in the spring, as the graduating class of seniors is larger than in incoming kindergarten class.

Board member David Kilpatrick noted that every year the board makes budget reductions and projects budget expenditures and balances and then the projections don’t appear to work. “Why not?” he asked. “Is the model working? Is the per student model the best way to be making our budget cuts?”

Kilpatrick also noted that the board may need to make two budget revisions this year, instead of the usual one revision in February as part of the budgeting process.

Donna Wilson, business manager for the district through School Management Services, reviewed the district’s financial position through the first quarter of the fiscal year with the board. So far, the district has received $2,158,453 or 16 percent of its $13.4 million in budgeted general fund revenues and spent $2,487,321, or 18.6 percent, of the $13.35 million in budgeted general fund expenditures.

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Gretchen Schlosser

Gretchen Schlosser is the public safety reporter, and writes about agriculture occasionally, for the West Central Tribune. She's been with the Tribune since 2006 and has 17 years of experience working in news, media and communications. 

(320) 214-4373
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