Clarkston Community Schools continue to draw recognition for their financial administration, but auditors have made recommendations for improvement.
The Plante Moran accounting firm presented the district’s 2003-2004 audit at the Monday, Sept. 13 board of education meeting. At a sparsely attended public hearing and during the regular board meeting, auditors said Clarkston administrators did well in keeping their books and in wisely spending their available funds.
Plante Moran staffer Tina Kostiuk noted the district’s discipline in spending only 95 percent of the projected 2003-2004 budget ($62,334,188 of the projected $65,724,291). Thrifty spending, combined with previous cost-saving measures, allowed the district to end the previous year with an undesignated fund equity level of 17.5 percent, well above the board of education’s goal of 15 percent.
That amount would allow the district to operate for about 30 days (based on an average daily cost of $342,495 to run the district) in the event of a major financial emergency.
‘With all the uncertainty you’ve had [with state aid], building the fund equity is important,? Kostiuk said, noting rising costs of employee salaries and benefits in light of uncertain future state aid. ‘It doesn’t take long for it to go away.?
In the 2004-2005 budget, officials anticipate the fund equity to shrink to 13 percent, depending on the yet-to-be-finalized state aid formula. Superintendent Al Roberts said increasing costs for retirement and health coverage will continue to bite into those reserves.
‘It doesn’t look like we will be getting a lot of help from the state,? Roberts said.
Auditors? reports focus primarily on a unit of government’s record keeping, with a ‘unqualified? or ‘clean? opinion being the highest possible praise. For the fifth consecutive year, Clarkston schools have received the Certificate of Excellence in Financial Reporting from the Association of School Business Officials.
Kostiuk said the district’s financial report, ‘was judged to have complied with the principles and practices of financial reporting recognized by the organization.?
Kostiuk also praised the district administration for doing well in adapting to the new accounting standards, which now require governments to include capital assets and long-term debts in the overall financial statement.
In that computation, Clarkston schools are technically at a deficit of $6,017,887, because of a combined debt of $205,636,051. Officials noted the gradual payoff of voter-approved bond issues have already reduced the net deficit by about $6 million over the past two years.
In the midst of their praise, auditors issued a separate letter suggesting improvement in ‘management? of district finances.
‘We noted certain matters involving the internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants,? Kostiuk wrote.
Among the items of concern were ‘segregation of duties and responsibilities? in handling cash transactions and reconciling bank statements, documentation of tasks performed with funding from federal sources, use of a school district Discover card carrying a 50-cent per day transaction fee and ‘periodic interruptions? in the district’s computer system, ‘which may lead to inefficiencies.?
Bruce Beamer, executive director for business and financial services, said the administration appreciated that report. Among the immediate actions was to cease using the Discover card, and other reviews are underway. Computer issues were attributed to server maintenance which is necessary, though sometimes inconvenient for some users.
On the other hand, Beamer said it is impossible to implement all the auditors? recommendations because of budget constraints.
‘You can’t automatically do everything they want you to do because we don’t have the staff,? he said.
Trustee Barry Bomier asked whether there is real impact with some of the accounting issues.
‘When you look at it from a customer service perspective’do you have payroll issues?? Bomier asked Kostiuk. ‘My perception is we’re doing well in that area.?
Kostiuk said their review ‘sampling? revealed no immediate problems.
‘Nothing came to our attention,? she said, noting the district’s current situation. ‘You really have grown. Your office is small. You’re tightly staffed.?
Nonetheless, Kostiuk recommended a cost-benefit analysis of hiring more staff compared with the potential penalties if payroll problems arise in the future.
The annual audit cost the district $29,200.