District audit reveals mixed results

The Carlton school board received the results of the annual audit on Monday night and learned that this year’s deficit is lower than expected. Janel Bitzan of the accounting firm BerganKDV outlined the results via remote video presentation.

“The amended budget called for a decrease [in the general fund] of $463,000. The actual was a decrease of about $65,000. So about $397,000 better than you anticipated the fund balance to come out,” she said.

Why the big disparity between the anticipated and actual? Mostly it was federal dollars coming into the district.

“Your revenues from federal sources were about $479,000 over budget, and that was due to using more of your Covid-19 federal funds than what you had originally budgeted for,” Bitzan told the board.

That money will go away soon. It has to be spent on specific needs resulting from the Covid pandemic and used by September 2024.

“I’d like everybody to remember that those numbers contain some extra funding that we won’t get again,” said board chair Julianne Emerson.

An accurate view of the financial health of a Minnesota school district can sometimes be gleaned by considering the part of the general fund’s unassigned fund, where regular state and local funding lands, and from which school districts pay their employees and other operating expenses. Most districts try to keep a minimum balance in reserve.

Bitzan noted that Carlton’s unassigned fund balance is concerning. She pointed to the very sensible Carlton district policy that calls for an unassigned fund balance of 16 to 25 percent of expenditures. The $370,000 there now means the district’s reserve is at about 6 percent, she said.

Future revenues that can be expected are tied to enrollment, which is dropping. The written report that accompanied Bitzan’s oral presentation stated: “State revenue, which makes up the largest percentage of the district’s revenue at 62 percent, decreased from the prior year by $266,623 due to enrollment declines.”

The state uses a measure called PUN, or Pupil Units, to represent enrollment. The written report stated, “In each year presented, [the last five] the district has experienced a net loss in PUN.”

Asked to comment on the unassigned fund balance after the meeting, superintendent Donita Stepan said they know that number will continue to go down.

“We can’t cut our way back up to the fund balance of 16 to 25 percent,” she said. “So we have to have more students. And that’s why this consolidation [discussion].”

In other matters, Stepan reported on the search for a principal for South Terrace Elementary. “You have five applicants and [we] interviewed three … within the next week, we’ll be making a recommendation,” she said.

Stepan was pleased with the quality of all three and commented about the likelihood of getting someone in the middle of the school year.

“We worried about the timing, [but] we felt really good about what we got,” she said.