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Audit says Morris Area School District finished the year strong

The Morris Area School District finished the fiscal year June 30, 2016 with more revenue than expected and lower expenses, auditor Matthew Defoe told the Morris Area School Board at the Oct. 24 board meeting. Revenues were up 2.4 percent and expenses were down 3.6 percent, Defoe said.

Defoe of Eide and Bailey's office in Fargo, North Dakota, presented an audit report at the meeting.

In an interview this week, Morris Area School District Superintendent Rick Lahn said "To add (about) $650,000 to the fund balance at the end of the year is a good thing."

That $648,000 was set aside for future school building repairs, Lahn said.

Lahn said the gain indicates the district is a good steward of taxpayer money. The district makes projections on expenses and revenue for each budget year based on the best knowledge it has, Lahn said The overall goal is to be good stewards, he said.

"We don't always come in under budget," Lahn said.

The audit also showed good stewardship on the district's part in the area of the unassigned fund balance, Lahn said. An unassigned fund balance is money that is not assigned to any particular expense.

The district wants that unassigned money to equal 5 to 15 percent of the school's operating budget.

"We're happy to report the district is at 9.1 percent," Defoe said.

"The unassigned fund balance is often used a measuring stick to compare the financial health of one district to another," Lahn said. "It's money in our accounts that is not spoken for as compared to the total operating budget. We don't want it to get lower than 5 percent."

An unassigned fund balance lower than 5 percent would be like a household living paycheck to paycheck, Lahn said.

The district also does not want the unassigned fund balance to be higher than 15 percent. "We cap it because we are not a bank," Lahn said. The school does not need a lot of money sitting waiting to be used, Lahn said. Instead the money should be used to educate students and operate the school, he said.

"You want to hit the middle. Ten percent is right in the middle and we're at 9.1 percent," Lahn said.

Another healthy number is the district's unrestricted fund of $4,135.253. Think of the unrestricted as an even larger savings account for the district that can be used for various expected and unexpected expenses.

During the Oct. 24 meeting Defoe pointed out the district's unrestricted fund of $4,135,253. Defoe's audit report said the Government Finance Officers Association recommends an unrestricted fund balance of no less than two months of a general fund operating budget while the State Minnesota Office of the State Auditor recommends about 35 to 50 percent of the operating budget or an amount of no less than five months of the operating budget.

The Morris Area School District has an amount slightly less than 40 percent of its operating budget in an unrestricted fund, or slightly less than five months.

That's an increase from the 31.3 percent in fiscal 2015.