Despite a projected loss of $1.2 million for fiscal year 2014-15, an external audit report says that Orangeburg Consolidated School District 4 “broke even” for the year.
Consulting firm Greene, Finney & Horton, LLP warned trustees in the spring of 2015 that the district had started the year with a deficit of $800,000 in the fund balance and predicted that without changes, the district was headed toward a $1.2 million deficit by the end of the year.
Larry Finney told the board earlier this month that changes made by the district paid off.
“To stand here before you now and be able to tell you that you basically broke even for the year is fantastic,” he said.
OCSD4 received some $350,000 more revenue from the state and property taxes than budgeted and a one-time infusion of $500,000 from general obligation bonds, Finney said. Budget cuts totaling $350,000 also “made up the difference.”
The district finished the year with a fund balance of about $2.2 million or about 7.6 percent of the year’s budgeted expenditures, he said.
The Government Financial Officers Association recommends maintaining a fund balance of 16.7 percent of the operating budget, or enough money to cover two months of operating expenses, Finney said.
Following the meeting, Finney said that different people have different opinions about how high the percentage should be. Some say that 10 percent is a healthy fund balance.
He gets nervous when the fund balance drops below 10 percent.
Though District 4’s fund balance doesn’t reach either one of those estimates, its financial situation looks much better than expected, Finney said.
“It’s a tremendous result based on where you were last spring,” he said.
He anticipates additional improvement in the fund balance by the end of the 2016 school year. By that time, a one-time, 18-mill tax increase will be paid to the district.
The goal for that money is to increase the fund balance to $3.3 million, where it was before this year, Finney said.
Finney reported that the district implemented a new accounting standard required by the Governmental Accounting Standards Board.
The standard requires state entities to claim their share of a huge, unfunded pension liability on financial statements.
The state’s unfunded pension liability comes to about $19 billion when the regular State Retirement Fund and the Police Officer Retirement System are combined, Finney said. District 4’s share is almost $41 million.
However that does not mean the district has to go out and find $41 million to pay the liability, he said. It’s still a responsibility of the State Retirement System.
What the district has to do is continue making payments into the system.
However, the rates the district and employees have to pay will continue to go up, Finney said. The purpose of the new GASB standard is to make people aware of the issue.
Additionally, Finney reported that the district received an unmodified opinion, the best a district can receive, for its accuracy in financial record keeping.
Finney also reported that the audit is providing the district with a number of suggested accounting changes that will provide it with a more effective way of financial reporting.
He noted that many of the changes have already been made and Director of Finance Michael Thom is currently working on others.
In other business, trustees unanimously approved the first reading of policy changes related to new state requirements in English language arts, reading, writing and math.
They include the following:
• Develop a comprehensive annual reading proficiency plan for students in grades K-12. Schools will now be required to teach cursive writing so that students “can create readable documents through legible cursive handwriting by the end of the fifth grade.”
• Schools will require students to memorize the times tables “to ensure that students can effectively multiply numbers by the end of the fifth grade.”
• Changes were also made in the wording of the Computer/Technology Literacy policy.
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