Posted: 10/26/04
New audit sheds more light on school district finances
By David Heiller
Argus News Editor
The Caledonia School District had a surplus of $350,826 in its unreserved fund as of June 30 of this year, the school board learned at its October 18 meeting.
That figure equals five percent of expenditures, which is less than the eight percent that is part of the districtís policy.
Those were two of the highlights from the annual audit that the board approved at the meeting, which was held at the Freeburg Community Center.
Tiffany Kriesel, of the auditing firm LarsonAllen in Owatonna, spent 45 minutes explaining the 56-page document and answering questions.
Here are some other main points:
ï Total revenues were $9,890,784, compared to expenses of $9,956,730.
ï A one-time transfer of $300,000 was made from the unreserved fund to the reserved fund for health and safety fund balance.
ï The food service fund balance increased $19,300.
ï The community service fund balance increased by $7,019.
ï The building construction at the new MS/HS and the renovation of the elementary school was completed during 2003-2004 and the building construction fund was closed.
New kind of audit
This yearís audit was the first one done under a model required by the Governmental Accounting Standards Boardís (GASB) Statement No. 34. The term GASB-34 has been big news for school boards and city councils for the past two years, and it has now arrived.
The purpose of it is to make annual reports easier for the public to understand.
It also has expanded disclosure, which showed up at last weekís meeting. For example, it showed total assets of $27,578,056, and liabilities of $29,100,482, leaving total net assets of a negative $1,522,426.
Board member Chuck Schulte took exception to the asset figure of $22,119,272 for the districtís buildings. He thought it should be much more, given the new middle/high school, which cost $23.5 million just two years ago, and the remodeling of the old high school into an elementary school.
ìWeíre down Iíd say $10 million bucks and thatís a significant figure,î he said.
But Kriesel said that the middle/high school is depreciating at the rate of $500,000 per year, and the value of the elementary school was done on a cost figure and not its market value.
Thatís the nature of the GASB-34 report, superintendent Mike Moriarty said later. The old reporting system didnít show the value of property as opposed to long-term debt. The new report does.
Districts without debt with a lot of buildings will look unbelievably rich, and Caledonia is just the opposite of that, Moriarty said.
The districtís capital loan of $14 million makes the bottom line look worse than it really is, he added.
Kriesel said the district may want to look at how to pay off that loan faster, because once that happens, investment in capital assets will go up significantly.
Board member Suzanne Roesler pointed out that the district made great financial progress in the past three years. In 2001 the district had an unreserved fund deficit of $543,003, compared to the current surplus of $350,826, a turn-around of almost $900,000.
ìYou did a lot of work to get into this positive fund balance,î Kriesel said. ìYou want to keep it there.î
That can be done in three ways, she said: by digging into fund balance, cutting expenditures, or increasing revenues.
There is probably no new state money coming next year, Kriesel added.
ìIf we have to cut, we have to cut, because we have seen huge benefits in the past two years,î Roesler said.
Schulte wondered if Kriesel had any ìmagic numberî that should be cut from the budget.
ìThereís not that magic number out there,î Kriesel answered. She said the board should see what the public wants to keep and wants to eliminate.
The board made cuts of about $209,000 in March of 2004.
Graduation day set
In other business, the board unanimously approved a new date for the 2005 graduation. It will be held on Friday, May 27 at 8 p.m. It had been set for Sunday, May 29.
High school principal Ron Helmer received surveys from 26 parents, which were evenly split between Friday and Sunday.
Barb Hurley said she appreciated the effort of doing a survey, even though it was not widely filled out.
Snow plowing bid approved
The board awarded a snow removal bid for the next two years to Caledonia Ready Mix. It passed 6-1, with Dave Klinski opposing it.
It took two votes to award the bid. The first motion, which was made by Naomi Fruechte, was to give it to Meyer Lawn and Snow Service/J&J Trucking-Excavating. It failed 2-5, with Fruechte and Klinski voting for it.
ìIím not sure what the low bid is, thatís whatís confusing,î Schulte said after the second vote.
For example, Caledonia Ready Mix bid on doing the sanding at the middle/high school for a flat rate of $150, with another $75 for adding salt. Meyer/J&Jís bid on that part was for $135 per yard cost for sand/salt.
Moriarty said that if more sand was used, it would cost more with Meyer/JJ as opposed to the flat rate from Caledonia Ready Mix.
Roesler said there was sometimes a benefit to stick with a past vendor if it had done a good job, even if the cost was a little higher.
Caledonia Ready Mix had done the work in the past two years, and had done a good job, according to principals Connie Hesse and Brian Doty.
Wind energy update
Moriarty asked the board to approve a $50 expense for putting wind monitoring equipment on a tower owned by Midwest Wireless. The board did so.
The monitor, which will measure wind speed, will be in place for six months to a year. It will be used to try to determine if a wind generator is feasible for the school.
Dance line discussed
Moriarty said some students had approached him about starting a dance line at the school. He said that parents would finance it.
Charlie Wray wondered if the district would be responsible for transportation. Schulte said he would like to see a proposal from the students.
Moriarty said he finds it distressing that the school has no cheerleaders or dance line. ìWe talk about school spirit all the time, but we donít have anybody promoting it,î he said.
Naomi Fruechte said she likes the spirit side of it, but not the competitive part due to costs.
Moriarty said he would pass along information as he receives it.
Strongís Karate questioned
When community education director Nancy Runnigen passed out fall-winter community education catalogues, several board members questioned a class called Strongís American Karate.
ìAre we going beyond a community education class and more furnishing a place for a business?î Roesler asked. She compared it to places like a private gymnastics program which has its own facility.
Runnigen said that more than 40 people have told her that they support the class and feel strongly about keeping the class in the community education program. She said owner Bruce Strong pays $11 per hour for using the school.
ìWe are renting the facility to him,î Fruechte said. ìItís not really a community education class.î She added that she did not think the classes were a bad thing.
ìItís a heck of an angle, letís put it that way,î Dave Klinski said.
Moriarty said community education should be charging a per-participant charge. He said he would contact other districts in which Strong runs community education karate classes, and try to formulate a price structure among all the districts.
Web site improved
Moriarty said that the schoolís web site now contained a lot more information. The web site, www.cps.k12.mn.us, was criticized by some board members at the September meeting for being incomplete.
One of the things that has helped it is having administrators putting their own information on it, elementary principal Connie Hesse said.
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