Reserve balance drop should reverse in a year

    Due to expense adjustments between fiscal years 2017 and 2018 in Holyoke School District Re-1J, the ending fund balance for the past year dropped to $952,907, reported auditor Scott Szabo of Lauer, Szabo & Associates at a special school board meeting Tuesday, Dec. 19.
    This represented a decrease of $406,173 from the beginning fund balance of $1,359,080.
    Szabo explained that the large decrease can be attributed to a few large expenditures that were budgeted and paid for in FY18 but were expensed in FY17. The school district fiscal year runs from July 1-June 30.
    “These expenses were reflected in the accounts payable of the balance and will be reversed at the audit next year,” noted Szabo. “The district anticipates a correction in the general fund reserve balance next year, with levels returning to the district’s normal levels,” he added.
    A little over $230,000 can be attributed to the BEST grant construction project involving roofing. It was partially expensed in FY17, but funds weren’t received until FY18.
    Additionally, Budget and Finance Director Ben Rahe noted that new reading materials amounting to around $75,000 came in two days before the end of FY17 to be noted as an expense in FY17, while it was budgeted in FY18.
    Another unforeseen expense adjustment was the Colorado Department of Education five-year audit, amounting to $35,000.
    Board member Dennis Herman reiterated that it would be difficult to plan construction projects and even reading materials delivery a year out. Timing can’t be predicted, and as a result the funding report is skewed between the two fiscal years.
    Szabo’s audit report noted that the district recognizes the possibility of using beginning fund balance for FY18 to cover growing instruction and capital expenditures. Updated appropriations for the 2017-18 budget will be made at the Jan. 16 board meeting.
    While it’s not a liability or anything that the district owes, the Public Employees Retirement Association liability increased and was explained in detail by Szabo.
    It’s not a reflection of school or staff, but based off PERA’s current projections, the school’s share of the pension liability increased. He emphasized that the district is paying what it should be with regard to PERA.
    Because of the PERA projections, the district’s percentage of payroll to PERA increased from 18.77 percent to 19.4 percent.
    Approval was given for the 2016-17 audit report.