HCSD’s annual financial check up

HCSD’s annual financial check up

HCSD’s annual financial check up

The Humboldt County School District (HCSD) Board of Trustees approved the audit report for fiscal year 2017 during the Nov. 28 meeting. Shelly Drake and Tara Larson from Drake Rose and Associates prepared and presented the report.

Drake began by explaining the purpose of an annual audit. Aside from being required by Nevada Revised Statute, “there’s an imposed requirement that you inform the public – the taxpayers, your debtor relations, your federal funding sources, the state – about the operations of the Humboldt County School District,” she said.

According to Drake, a first glance at the district’s net position might cause concern, as its liabilities outweigh its assets by $19 million. The majority of the amount of liabilities was comprised of the district’s share in the Public Employees’ Retirement System (PERS). While the district has been participating in PERS for many years, recent accounting policy changes now require the district to report their share of the statewide retirement program.

For a more detailed description of the PERS discussion, see the accompanying article in this issue.

Tara Larson said that Drake Rose and Associates issued an unqualified or “clean” opinion about the district’s financial statements. This means that the school district’s financial statements accurately represent its activities. This is the highest opinion a CPA can give of an entity's finances.

The district’s net position decreased $3.3 million from last year due to a decrease in revenue. The largest component of the loss, $2.2 million, was due to the net cost of PERS benefits. The district saw less erosion of net position this year than in 2016.

Larson said there were no NRS violations to report.

The district has seven sources of income: ad valorum (such as property taxes), local school support, state distributive fund, governmental services tax, tuition and other local sources, federal sources (grants, etc.), special appropriations and daily lunch sales. The amounts from these sources have remained generally steady over the past three fiscal years, Larson said.

Formula funding from the state has stayed level year to year at around $30 million.

Non-formula funding sources (grants) have also remained generally level from year to year. Special appropriations amounts jumped over the last two years due to increased state funding. The state has increased the number of new sources as well as the amount available from existing sources.

The largest grant amount came from the Read by Grade 3 grant at around $465,000. Other grants showed an increase as well, including the Social Worker grant, English Mastery grant, Full Day Kindergarten grant and the Turnaround grant.

Totals for salaries and benefits went up about five percent year to year. Larson said the increase was mostly due to hiring incentives, short and long-term subs, filling vacant positions, cost of living increase and extra days beyond contract. The year to year change overall was minimal.

Purchased services increased mostly due to professional development expenditures. Kids First Consulting contributed to $150k of the increase, for example.

Capital projects and debt service varied slightly and are connected. The amounts in both depended on when projects finished and when funds were transferred to pay for them.

The district’s general fund dropped $1.6 million compared to 2016 due to the lack of net proceeds from minerals. Superintendent Dave Jensen said the drop was expected. “With the sunsetting of advanced net proceeds from minerals, we knew there would be a year when we would get none,” he explained. “We’ve seen this coming for years. This was the year it hit.”

He said the projected amount from net proceeds from minerals for the upcoming year is about $2.3 million.

The two major grant programs for the grant compliance audit – the Child Nutrition cluster (food service) and Impact Aid, showed no instances of noncompliance or deficiencies. Same for the Nevada Revised Statute compliance audit.

Drake said conversations with Jensen and district Financial Supervisor Ronda Havens brought up a couple of areas to look into moving forward: student activity fund procedures and the district-wide purchasing policies.

Drake suggested the district should keep in mind that debt can impact credit rating. “What impact it has, we haven’t seen that yet.”