Schools

District 196 Gets Clean Opinion on 2010-11 Audit

An audit of the district's financial statements shows more revenue brought in and fewer expenses than predicted; auditors found one weakness.

The Rosemount-Apple Valley-Eagan school district received an unqualified opinion for the audit of its 2010-11 financial statements, which shows the district took in more and spent less than during the previous year.

The report shows the district earned about $329.7 million—about $7 million more than in 2010—and spent $322.6 million, which is $2.7 million less than last year; it also exceeded predicted revenue for its general fund, and underspent compared to projections for the 2010-11 budget.

Looking at all funds, about 45 percent of expenses were in elementary and secondary education instruction, while 17 percent went to special education instruction.

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About 47 percent of revenue was from grants and aid, while 31 percent came from property taxes. About 14 percent came from operating grants and other contributions.

General Fund Revenue

For 2010-11, District 196 took in about $291.96 million, or $713,000 more money than expected, due mostly to collecting more delinquent taxes than expected and increased earnings from admission and activity fees, the audit report shows.

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General fund revenues were a little more than $5 million higher than last year, in large part because an increased state tax shift caused a $24.5 million shift from state aid to taxes.

The revenue from general fund property taxes went up by about $2.54 million, mostly because of the district's alternative facilities levy, which transfers that money earned to a fund for building construction.

General Fund Expenses

District 196 spent about $284.07 million in general fund dollars in 2010-11, or about $10.67 less than projected. That's $3.11 million less than in 2010.

Salaries and benefits were $5.14 million under budget, mainly because of staffing reductions, and unfilled positions left by retirees or those who resigned; they represent the largest part of general fund expenditures.

Salaries accounted for $186.95 million of the general fund expenditures—a more than 2-percent decrease—while benefits increased 3.21 percent from 2010, to $58.98 million.

Expenses for purchased services and capital expenditures went down; despite a 10 percent cut in supply budgets passed in the final 2010-11 budget, spending on supplies still went up 10.42 percent, to $8.76 million.

Fund Balance and Cash Flow

The district's general fund balance increased by about $463,000, to $35.5 million, while the overall balance for all funds combined increased by about $544,000, to $45.12 million.

The fund balance for the operating budget is about 13 percent of the district's expenditures.

In terms of operating cash and investments, the district ended June with $3.1 million, down more than $34 million from the previous year.

This was due to the shift in when the district receives state aid, which for fiscal year 2011 was changed to a 60-40 balance, or 60 percent during the current year and 40 after the year is over.

The shift previously was 70-30.

Weaknesses and Improvements

The one deficiency the auditors found was in internal control compliance—essentially, having cash in schools that isn't given to the district office right away, which can increase opportunities for fraud. This might happen when students are asked to bring in money to pay for a field trip, for example.

The district soon will look at a system to encourage using credit instead of cash or checks said District Finance and Operations Director Jeff Solomon.

Superintendent Jane Berenz said it would be ideal to have an online system to handle registration for programs as well as payments.

Limiting use of cash is " probably the best way to improve those controls," auditor Bill Lauer said at a board workshop on Monday. It's a bigger deal than it used to be, he said.

The district improved in areas involving keeping reports for certain special education employees, as well as reporting a quarterly jobs data survey for special education required by the American Recovery and Reinvestment Act of 2009.

Final 2010-11 Budget

When the board , it included about $4 million in additional revenue and $11 million in cuts.

"We truly stopped growth and reduced expenditures," District Finance and Operations Director Jeff Solomon said Monday at a school board workshop.

One of the largest cuts was eliminating 144 full-time equivalent staff for $7.65 million in savings. The district also reduced its supply budget by 10 percent, eliminated middle school sports including football, baseball and softball and reduced energy costs.

Revenues included using a trust fund to pay for retiree health insurance and increasing student activity fees.


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