Auditors give Farmington schools high marks for budgeting

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An external audit by Minneapolis-based BerganKDV accounting firm found Farmington's school budget clean, but its savings account lacking.

Matthew Mayer, an auditor from the firm, gave his report at the Monday, Jan. 9 school board meeting.

"You still are not at what you yourselves stated should be your level of financial health," Mayer told the board.

The board has set a goal to have 6 percent of its budget remaining at the end of a fiscal year and put it aside like a savings account to help when things get tight.

The school managed to save 4.3 percent at the end of the 2016 fiscal year, which includes revenues and expenses from July 2015 through June 2016.

While saving 6 percent of the district's budget to grow their fund balance is a good goal to have, most Minnesota school districts of similar size have a 20 percent goal for their overall fund balance, said Mayer.

"You are significantly below that," he said.

As far as spending, Mayer said the school stayed within its budget and even ended up with a surplus, thanks to increased enrollment and a larger allotment from the state.

The district had budgeted for $67.7 million in revenue, but actually received $69.4 million. It budgeted $67.5 million in expenditures and spent exactly $67.5 million. This resulted in a $1.9 million increase in the fund balance.

"They spent exactly what they said they would spend," Mayer said. "I would commend them for that."

Total general fund revenues increased $3 million or 4.5 percent from 2015 and have increased $10.5 million, or 17.6 percent, over the last five years.

In 2012, state sources made up 84.5 percent of general fund revenues, local property taxes made up 9.5 percent, and other sources made up 6 percent.

In 2016, state sources made up 86.9 percent of general fund revenues, local property taxes made up 8.7 percent, and other sources made up 4.4 percent.

Local property tax revenue increased by $1 million from 2015 which was a result of an increase in levy and excess tax increment financing revenue, the report said.

School enrollment has gone up 550 students since 2012, totaling 7,572 students in 2016.

Funding per pupil can be a double-edged sword.

For example, Mayer said Farmington actually gets less state money per pupil because it has fewer students needing aid, such as free or reduced lunches than other districts in the state.

Auditors also looked at how the district followed accounting and reporting laws and found no compliance issues.

Mayer said he would like to see Financial Director Jane Houska's role become less hands-on and have her become more of a facilitator, providing oversight rather than actually paying bills for the purpose of segregating duties and creating a better check-and-balance system.

One budget item that keeps the district from making gains in its fund balance is the amount of money still being paid to retirees who, a decade ago, were promised health care benefits beyond their employment.

About $1 million is going to people that no longer work in the district, he said.

The district received a Certificate of Excellence in Financial Reporting from the Association of School Business Officials International.