The Whitman-Hanson Regional School District scored well on this year’s audits — by receiving a finding of an “unmodified opinion,” which is the best opinion possible, according to audit firm representative Dan Sullivan on Wednesday, Jan. 11. Another report, filed with federal accounting officials found no “significant deficiencies or material weaknesses over financial reporting or of compliance.”
“Having ‘no findings’ is a major accomplishment,” Superintendent of School Dr. Ruth-Gilbert-Whitner said in congratulating Director of Business Services Christine Suckow on the audit results. “This is something to be greatly respected.”
Clifton Larsen Allen, which has performed the district audit for the last three years, began preliminary fieldwork for the latest audit in April 2016, according to Sullivan. Primary work is begun in November when the books on the fiscal year are closed.
“Management and staff, consistent with prior years, were responsive to all our questions and available to us throughout the whole audit,” Sullivan said. “The end result was actually a smooth audit process.”
He added there were no disagreements with district management during the audit and district officials knew what the firm needed and were prepared.
“The school district is audited by an accredited auditing firm yearly,” School Committee Chairman Bob Hayes said. “It is also audited by DESE (the state Department of Elementary and Secondary Education), because we receive federal money and state money. … There’s always been questions as to what’s going on with different finances. Every single year we are audited by a private company.”
The audit reports were part of a School Committee meeting devoted to preliminary budget discussions ahead of the Wednesday, Feb. 1 rollout of the fiscal 2018 W-H school budget.
The Clifton Larsen Allen audit was broken up into two groups — the Government Y statement of debt position and activities as well as the fund-based financial statement, which deals with current funding sources.
Long-term financial liabilities of pensions and other post-employment benefits (OPEB) are included in the Government Y report. The fund-based report centers on revenue coming in and payments going out.
The district’s net position is about $30 million, including net investment and capital assets — about $59.2 million — and includes building, equipment of about $66 million less the current outstanding debt of $7 million. Restricted net position is $1.9 million, of which $600,000 is related to Circuit-Breaker funds and $1.3 million consists of other special revenue funds.
An unfunded pension liability and unfunded OPEB liability create a combined $30.8 million deficit. Annual OPEB costs were almost $5.1 million, up from $4.8 million the year before — the total unfunded OPEB liability is about $55 million, with the whole liability to be brought in during fiscal 2018.
“It’s put out over the years,” Hayes said. “It’s not a liability that’s got to be paid. Most towns, most school districts have these liabilities because of other post-employment benefits.”
“There’s no requirement to fund this at the moment,” Sullivan agreed.
Long-term debt has decreased from $14.8 million to $6.6 million because the district entered into a debt refinancing in fiscal 2015, which crossed over fiscal years.
Fund financial statements show the general fund, the most important as it relates to operation of the district, shows a balance of $2.7 million, which is $169,000 higher than the previous year.
“You are very conservative with your revenues, so you probably collected about $150,000 more in revenue than you planned and you turned back about $583,000 in expenditures that you didn’t use,” Sullivan said, adding that the year before there was about $150,000 from unused encumbrances. “Since we’ve been doing the audit, that’s been pretty much how it’s been working … it’s a position of strength.”
The committed fund balance, or excess and deficiency line item, is at $950,000, up from $750,000 from the previous year. The signed fund balance reserved for encumbrances in fiscal 2016 budget, but still in processing at year-end.
The unassigned, or free-and clear, fund balance stands at almost $1.4 million. That figure, Sullivan said, represents 3 percent of revenues.
“The reason why we look at that is that your revenues could fluctuate 3 percent and you have enough unassigned fund balance to cover anything if it happened,” he said. “The chances of your revenues fluctuating are pretty non-existent because 90 percent are made up of assessments and Chapter 70 monies, which are very constant.”
District Treasurer David Leary also advised that the committee vote to assume two bond authorizations at the auditors’ request — one to rescind $283 left from the bond on the high school building, the other to rescind an outstanding $281,300 from the Maquan feasibility study. The board unanimously approved both requests.
“We’ve got a very strong debt position in this district,” he said, echoing Sullivan’s report. “It’s pretty unusual to find a place where the only thing that you owe is the money on this building, which is a little over $6 million and a short-term note for technology.”
The district maintains a solid AA bond rating from Standard & Poor’s with a stable outlook.
He also suggested the committee authorize him to invest some $400,000 worth of scholarships in the treasurer’s custodial care in an effort to “do a little better” in increasing their yield.
“Right now they are sitting in small savings accounts,” he said.
“As you can see in hearing from our treasurer and our auditors, WHRSD appears to be in good financial and business management condition right at this particular time,” Hayes said.