Audit of Schools Reveals Need For Improvement
The School Committee heard a report from the District's Auditors and, in general, the report found the School District is in sound financial condition and has taken steps to improve past issues raised by auditors. The audit covered the time period of fiscal year 2012 (July 2011 to June 2012) and reviewed the District's assets, liabilities and revenues and expenditures. It also addressed the District's response to previous years' financial issues and highlighted current issues and future ones which could impact future budgets of the School District.
Current financial issues raised by the audit include a clarification of the District's "Compensated Absences" policy and a recurring deficit in the athletic budget. A future issue which, the auditors state, will have a major impact on the fiscal 2015 financial statements of the District is addressing the unfunded liability for health and pension plans of employees. The audit also notes that the School District saved $626,060 through refinancing some of its long-term debt which was returned to Groton and Dunstable through reduction in debt assessments. The District returned $394,582 in fiscal 2012 and $231,478 in fiscal 2013 (this year).
The audit highlighted several issues which the District plans to address in the coming year. One issue was payroll documentation including a clarification of the District's compensated absences policy. Compensated absences allow employees to accrue unused sick and vacation time which the School District will then pay to the employee. The audit notes that the practice is not clear whether the District pays for unused vacation time at time of termination or retirement. On other payroll issues, the audit notes that the District does not have a comprehensive system of documenting pay rates for the different categories of employees.
The audit report also notes that the District should establish plans to avoid ongoing deficits in the athletic budget. The report states that the committee had to transfer $144,402 from an athletic revolving fund to clear a deficit from fiscal 2012. The District has responded to that issue and the athletic budget was increased in the fiscal 2014 budget which was approved at last month's town meeting. The School Committee is also studying whether or not to increase athletic user fees.
While it is not clear what impact an unfunded liability for health and pension plans of retired employees will have on the District's operating budget, it will definitely impact the District's financial statements. According to the audit, the Governmental Accounting Standards Board has issued "Statement No. 68" which requires municipal entities to report as a liability the unfunded expenses of health and pension plans of retired employees. This requirement is to be implemented in fiscal 2015 (Jul. 2014 to Jun. 2015). According to the audit, the District's unfunded liability as of July 2010 was $22.3 million. Currently, no part of that unfunded liability is set aside in any fund.
Aside from these issues, the audit notes that there wasn't much change in the financial situation of the District from fiscal 2011 to fiscal 2012.