Morris Area School District receives clean audit report
MORRIS - The Morris Area School Board received a clean audit and good news about the district's financial status at their meeting Monday night; however, delays in state aid payments may leave the district - and all other districts across the state - with cash flow challenges going forward, explained Brian Stavenger, a certified public accountant and partner with Eide Bailly, during his presentation of the firm's annual audit.
"The goal tonight is to talk about the situation that the state has burdened each and every school district with in the state of Minnesota, which is cash flow challenges galore," said Stavenger.
According to the company's report, the district received a "clean" audit or "unqualified opinion," which means the district's financial statements were prepared in accordance with generally accepted accounting practices and are free from material misstatement.
In the 2010-2011 school year, the district had about 1.9 percent more revenues in the general fund than were budgeted. The district also spent about 2.5 percent less than budgeted, meaning the district had a net gain of about $384,000 and a general fund balance of about $2.9 million, said Stavenger.
However, than $2.9 million should not be confused with cash reserves or cash in the bank because of delays in state aid payments, said Stavenger.
At the end of fiscal year 2011, the district was still owed about 30 percent of its state aid payments, a total of more than $1.9 million. This means that the district only had about $1.2 million in cash available that could be used.
"That is an enormous difference from the fund balance to what's actually in cash," said Stavenger.
One challenge for the district is that it no longer qualifies for state aid anticipation, a program that allows schools to borrow money for cash flow purposes. If the district does run into problems, it will have to borrow money elsewhere.
Delayed payments of state aid like this one have been increasing over the last several years. Between 2007 and 2009, about 90 percent of the payments from the state were made during the district's fiscal year (July to June).
In the last few years the state has begun to delay payments to district. In 2010 the state paid 73 percent during the year and 27 percent after. In 2011, the ratio was 70 percent on time to 30 percent late. According to the audit, in 2012 it will be 60 percent on time and 40 percent late. These delays can create a cash flow issue for some districts going forward, Stavenger explained.
Since the end of fiscal year 2010-2011, most of the outstanding state aid payments have been made, but that is unusual when compared to other districts. It often takes the state about six months to catch up on payments, Stevenger explained.
Superintendent Scott Monson told the board that the district does have cash flow predictions based on what payments are expected, but that there are periods during the school year where cash flow does become "difficult."
Look for stories from the rest of Monday night's meeting online tomorrow and in the paper on Saturday.