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Audit: GESD finances pass, for the most part

GLOVERSVILLE — The Gloversville Enlarged School District Board of Education on Monday heard results from the district’s annual audit for the 2018-19 school year.

Audit Manager Christopher Healy of Marvin and Company briefed the board on the largely positive findings from the annual audit that revealed the district’s financial statements to be fairly presented in all material respects.

“That’s a clean opinion,” Healy said.

Healy went on to note that the district’s net position at the end of the school year was a deficit of $40 million due to actuarial calculations of the district’s retiree health insurance liability that projects the total cost of health insurance for all current employees and employees who have already retired at $123 million.

“In New York state, you are not allowed to fund that liability at all, so that’s why you end up with a deficit in your net position,” Healy explained, noting that this information was discussed in greater detail with the school board’s audit committee.

Additionally, Healy said that the audit included one finding of non-compliance with real property tax law for holding an unassigned fund balance in excess of 4 percent of the district’s total annual budget.

The fund balance non-compliance and adjustments Healy said auditors made over the course of the audit were recorded as material weaknesses or deficiencies related to the district’s internal controls and compliance in accordance with government auditing standards.

Marvin and Company provided a clean opinion of the district’s compliance and internal controls over compliance in relation to federal awards, an area Healy said was required to be examined because the district expends more than $750,000 in federal awards.

According to Healy, the district expended approximately $4.4 million in federal awards during the 2018-19 school year.

An additional examination of the district’s extraclassroom activity fund was performed and a clean opinion was provided by auditors who also made management recommendations related to compliance with state guidelines for the cash based accounts.

“You’re always going to have something there when you have that level of student activity,” Healy added.

As he concluded his report, Healy complimented the work of district Treasurer Cathy Meher and the staff in the business office in preparation for the audit.

“They did a really phenomenal job being prepared for us, everything was ready when we came in,” Healy said. “This was our third year as your auditors. You can really see a progression and improvement in the condition of the finance records over that time. A lot of that credit goes out to Cathy, so I just wanted to point that out.”

Following Healy’s report the Board of Education passed a motion to approve the audit findings for the 2018-19 school year as presented.

After Monday’s meeting, GESD Superintendent David Halloran said that the district will work with its financial advisors to ensure that the appropriate reserve funds are in place to hold a portion of the fund balance amount in excess of the 4 percent cap set by the state, pointing to things like establishing a capital project fund as a means to bring the district into compliance.

“I think it’s a matter of setting up the proper reserves, you’ve got to be careful that the reserves are set up so you know you can utilize the funds,” Halloran said. “It’s very specific where you can put that money.”

Halloran went on to note that the excess fund balance amount was not planned and said it is not indicative of the district receiving more money than it requires.

“Some of the savings that we had are a result of moving retirees to the Humana plan, it saved us $1.4 million that was not budgeted for,” Halloran said.

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