Written by Rich Forestano Friday, 10 December 2010 00:00
The Mineola School District’s external accounting firm reported to the board of education at its most recent meeting at the Willis Avenue School. Dave Tellier of Nawrocki Smith, LLP detailed the district’s financial stability and basically said “we’re in good shape.”
The external auditor analyzes the district’s financial statements to see if they’re accurate and consistent with accounting standards so that the board has enough “wiggle room” to operate in assessing the financial condition of the district. Tellier said no glaring weaknesses or discrepancies existed within the 60-page report and the district was found to be in excellent condition financially.
The firm audited the district’s general-purpose financial statements, as well as Federal grant awards and classroom activity funds. “My basic question to you every year is, are we in good shape?” School District Superintendent Michael Nagler said.
“Yes,” Tellier said with confidence. “[The district] has come a long way, let’s put it that way.” Tellier presented the results of the external audit report for the fiscal year ending June 30.
However, Tellier reported that the undesignated fund balance was “in excess” of the 4 percent of the entire yearly budget limitation imposed by State law. The district has $4.2 million undesignated in the general fund, whereas the limit is $3.2 million. Tellier had recommended against putting the excess into reserves because of the ongoing bond process.
Trustee William Hornberger asked Tellier if it’s possible to get below the cap, who replied that the district could establish another reserve to move the excess funds into, but the downside is the funds could then only be used for a specific purpose. The board could designate the funds for a specific number of items in next years budget, such as the proposed addition to the Hampton Street School, which the district will be paying for out of the designated fund balance.
Hornberger proposed that the district use $1.7 million from the undesignated fund balance to finance the construction on Hampton Street without a bond. This would make Hampton the pre-K-2 school south of Jericho Turnpike, the dividing line in the district reconfiguration. Hornberger stated that he feels Willis Avenue School is not the right place for housing a pre-K-2 configuration.
According to Tellier, the district currently has about $2.5 million in working capital, or a ratio of 1.3:1, meaning that for every dollar of liability, the district has $1.30 of assets with which to pay. That number is up from a 1:1 ratio last year.
“This is right in line with most school districts on Long Island,” Tellier said. “Capital assets account for $36.8 million based on the report of a third-party appraiser. Cash decreased by $1.1 million in 2009-10 as a result of the pay-down of bond anticipation note (BAN) principal.
“I believe one of the strong management decisions and board decisions that I’ve seen in a long time in school districts was actually trying to reduce your BAN obligations using current operations instead of going out for long-term financing and saddling the district with long-term debt payments going forward, Tellier said.”
The district’s net income over expenses was approximately $727,000, down from $1.4 million the previous year. The district experienced an increase in income of about 2 percent, primarily from ARRA funding, Tellier stated. Expenses are up over 3 percent from last year.
The auditors posted the obligations the district has toward retirees. The 2009-10 school year was the first year districts began being required to begin reporting this number. Mineola’s obligation has increased by $1.7 million.
“Every year for the next 28 years you’ll be looking at an extra $1.7 million,” Tellier said. “Compensated absences have increased by $500,000 from 2008-09.”
The auditor has made several recommendations to the district, primarily in the areas of budget transfers, employee reimbursements and user permissions. One of last year’s seven recommendations has been implemented, the rest are in the process of being implemented and/ or “receiving further consideration.”