Auditor says schools' books are in order, be prepared for 'budget cliff'
November 03, 2010 - Oxford Community Schools financial books are in order, but they need to be prepared for what lies ahead.
That was the sentiment after the district's June 30, 2010 audit results were presented to the Oxford Board of Education on Monday, Oct. 26.
Yeo & Yeo, P.C. Manager Jacob Sopczynski gave the district books an unqualified opinion, the highest level of assurance an auditor can give.
Sopczynski reported that he found only one significant deficiency in the audit of the federal revenue the district received. Auditors had to come in and complete some of the journal entries to finish preparing for the audit.
"There were some issues beginning before we started with the accounting staff and some health issues with a family member, so some of those things were not prepared as timely as they should have been," he said.
He believed the incident to be an isolated case and that the significant deficiency should be resolved next year.
Sopczynski said he was pleased the district took his comments about credit cards and journal entries from the previous year's audit and "fixed the problem."
According to Sopczynski, the district's revenues exceeded their expenditures by over $428,000, leaving their fund balance at $5.8 million.
However, in the financial picture for the 2011-2012 budget, he told the board to be prepared for less revenue coming into the district from the state level.
"American Reinvestment and Recovery Act (ARRA) money has stopped, there may be Education Job money this year, maybe the year following, but the revenue side is being cut so hard," he said.
The district will be losing $1.3 million in ARRA money. Couple that with the potential loss of Education Jobs funds and declining taxable values on homes, the outlook for 2011-2012 looks grim.
"A catastrophic budget cliff looms that will continue to negatively impact the way we deliver programs and services," Sopczynski wrote in his analysis.
Superintendent of Oxford Community Schools Dr. William Skilling agreed with his assessment about state revenue.
"There is no way that we can realistically expect revenue increases over the next couple of years," he said.
Sopczynski added, "if we stay where we are and don't add any teachers and don't add any new expenses and spend exactly the same as last year, we still start out in the hole because we don't have the ARRA money."
Additional increases to the teacher retirement rate will create additional expenses for the district. The rate increased 2.47 percent to 19.41 percent on October 1 and was scheduled to increase to 20.66 percent on November 1, according to Sopczynski.
"That higher pension rate is going to come at a cost, and that cost is going to come to the district or the employees or someone who is going to have to pay that higher rate for the person who retired this year," he added.
Andrew Moser is a staff writer for the Oxford Leader.