NLS has negative unassigned fund balance of $787,084
NEW LONDON — The New London-Spicer School Board approved a resolution accepting the audit of the district’s finances by the accounting firm of Abdo, Eick and Meyers at the regular meeting Tuesday.
The audit, which the board previewed at its Oct. 28 meeting, showed the district has a negative unassigned general fund balance of $787,084 and a total negative balance in its general fund of $667,385. The deficits are 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 audit of the fiscal year ending June 30 leaves the district with a negative 5.66 percent general fund balance, when the unassigned total is expressed as a percentage of general fund expenditures, and a total negative balance of 4.8 percent, also when expressed as a percentage of general fund expenditures.
Andrew Berg, certified public accountant with the Twin Cities-based firm, noted that the auditors recommend a school district has 17 percent, or about two months of expenses, held in reserve.
He also noted that the district has a policy of maintaining a 3 percent fund balance and is not in compliance with that policy.
Berg noted that the deficit spending by the district is intentional spending of both the technology levy funds and capital improvement funds, and said the board needs to monitor the payments to fill in the deficit.
“We recommend that you monitor that deficit to make sure it is being paid back accordingly,” he said.
The board passed the resolution on a 6-0 vote, with board member Holli Cogelow Ruter absent from the meeting.
At the Oct. 28 meeting, Superintendent Paul Carlson explained to the board that the negative fund balances in the district’s capital funds, including negative balances of $55,714 in deferred maintenance, $59,650 in health and safety and $605,757 in capital projects, including the technology improvements, were a large part of what was pushing the deficit balance.
Carlson also explained that the district is not in statutory operating debt, because those capital fund balances aren’t considered in the statutory operating debt calculation. A district is in statutory operating debt if its negative fund balance is more than 2.5 percent of general fund expenditures and is then required to work with the state department of education to develop and implement a plan to return to financial stability.
The board also received an enrollment update, which lists 1,396 students as of Nov. 1, which is two students more than the 1,394 students district officials had expected at the start of the school year.