Clean audit again for District 16

by Elyse Kaner
Staff Writer

Spring Lake Park District 16 has been issued an unqualified, clean opinion in an audit for the fiscal year ending June 30, 2011.

The opinion was issued by Malloy Montague, Karnowski, Radosevich & Co. Certified Public Accountants of Minneapolis.

The firm is hired by the district to conduct an independent scrutiny into its financial practices.

Aaron Nielson of MMKR delivered the firm’s findings during the reports segment of the Jan. 24 regular school board meeting.

“We noted no matters involving the district’s internal control over financial reporting that we consider to be material weaknesses,” according to the firm’s Audit Opinion and Findings section of the management report, which Nielson reviewed at the meeting.

The favorable audit positions the district to submit for a certificate of excellence in financial reporting from the Association of School Business Officials-International. District 16 has received the award five years in a row and last year was one of less than 20 districts in the state to receive such an award.

State funding

With the exception of voter passed levy referendums, Minnesota school districts are largely dependent on state resources for funding.

In 2011, District 16 served 4,845 average daily memberships (ADM), an increase of 153 ADM or 3.3 percent from those served in 2010. (ADM are converted into pupil units and are the measure for determining revenue the district receives from the state.)

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In his management report, Nielson noted Spring Lake Park received state funding of $5,124 per pupil unit in 2011. The amount increases by $50 or 1 percent to $5,174 in 2012. Similarly, the amount will increase by $50 or another 1 percent to $5,224 in 2013.

The per pupil funds had been frozen at $5,124 for three years starting in 2009.

Unreserved fund

A school district’s financial health is commonly measured by its unreserved operating fund balance as a percentage of its expenditures.

District 16’s unrestricted/unreserved operating fund balance has steadily undergone an increase. June 30, 2010, the ratio of fund balance to expenditures was 4.7 percent, compared to a statewide average of 17. 7 percent, according to the report. (Statewide figures for 2011 were not available at the time the management report was published.)

At the end of 2011, the district’s unrestricted/unreserved operating fund balance had increased to 11.7 percent of operating expenditures, a far cry from the unreserved fund balance of about negative 13 percent of its operating expenses in 2002 when the district was in statutory operating debt. (District 16 emerged from statutory operating debt in 2005.)

While the district’s fund balance is still below the state average, the district has undergone a “drastic improvement” in the district’s unrestricted/unreserved fund balance in the last 10 years, Nielson said.

In an abbreviated overview of the audit report, Business Manager Amy Schultz said at a school board work session earlier this month, “… so we really did have a fantastic year, financially speaking.”

In particular, Schultz noted the district originally had projected an unassigned fund balance at less than $2.6 million, but it ended up being $4.1 million, she said.

General fund

The district’s general fund revenues in 2011 were $47.4 million. The amount was $1.4 million or 3 percent more than the district had budgeted and $950,555 more than the previous year.

The district’s expenditures in 2011 were $44.8 million, $337,320 less than the year before and $429,460 or 0.9 percent under budget, according to the management report. The drop resulted mostly because of a decrease in supplies, notably, in a 2010 adjustment of inventory in the vocation program.

Other funds

In other operating funds, the food service fund continues to maintain a healthy balance.

The fund ended the fiscal year with a fund balance of $568,305, or 29.2 percent of its annual expenditures of $1.9 million. Last year, the fund experienced an increase in fund balance of $127,338 compared to a budgeted decrease of $81,360.

The community service fund’s year-end fund balance was $11,739 or 0.5 percent of its annual expenditures of $2.4 million.

Both the food service and community service funds need to be self-sustaining, Nielson said.

The capital projects/building construction fund balance as of June 30, 2011 was $2.09 million. The fund is comprised of unspent proceeds from bonds voted on by voters. The funds are to be used for building improvement projects.

A post-employment benefits trust fund netted assets of $5.4 million. The funds are held in trust to finance OPEB (other post-employment benefits) for former district employees.

School districts are required by federal law to undergo annual audits.

District 16 operates on a total budget of $59 million.

While the district’s unreserved funds continues to grow, financially speaking, the district is still not out of the woods.

“A weakened economy and growing demand on limited resources continue to present challenges in funding education for Minnesota schools,” according to a statement in District 16’s Comprehensive Annual Financial Report.

Superintendent Jeff Ronneberg has stated the district does not plan to cut teachers next year, but it will undergo modifications.

District 16 serves nearly 5,100 students in Spring Lake Park and parts of Blaine and Fridley.

For more information, visit the district’s website at

Elyse Kaner is at [email protected]