Ad-Express and Daily Iowegian, Centerville, IA

October 29, 2012

State reaudit shows CCSD finances improve during FY 2011

By Michael Schaffer - Managing editor
Daily Iowegian

CENTERVILLE — A reaudit of the Centerville Community School District released Oct. 16 by the state auditor's office noted the district showed financial improvement during FY 2011.

The reaudit was performed at the request of a citizen's petition and covers July 1, 2009-June 30, 2010, years ending June 30, 2011, June 30, 2012 and items in applicable years.

The reaudit cautioned the Board of Education to "continue to monitor the General Fund financial position and continue to identify and evaluate all options available to the District to stop further deterioration of the General Fund balance during fiscal year 2013."

The reaudit points out the school district's General Fund unspent balance continues to increase. The district's General Fund unspent balance increased by 29.6 percent to $3,387,260 during FY 2011.

Because of the improvement in General Fund balance the school district also improved its Financial Solvency Ratio from FY 2010.

On June 30, 2010 the district's FSR was a negative 5.71 percent; on June 30, 2011 it was a negative 2.46 percent. A school district with a zero to 3 percent negative FSR is in a "Solvency Alert."

The reaudit states the FSR and financial condition need to be restored.

"Until the District substantially improves its financial condition and related FSR, any unanticipated expenditures and/or any unanticipated declines in revenues will be very difficult for the District to respond to."

The board has recently addressed declining enrollment and in planning the FY 2013 budget, the board was able to reduce ongoing expenditures. The board acted on $1.1 million in ongoing expenditures and reduced it by more than $800,000, which included closing the elementary schools in Mystic and Cincinnati.

The reaudit states the board should develop a plan that addresses "both spending reductions and revenue enhancements."

The board accepted the reaudit recommendations and said "it has an obligation to balance the budget with a focus on both revenues and expenditures."

The reaudit questioned school district contributions to the Morgan E. Cline Family Sports Complex and whether the district had "statutory authority to contribute public funds" to the non-profit corporation, Appanoose All Play, Inc.

The school district contributed $50,000 Dec. 13, 2007 for construction of competitive soccer complex and $25,000 Sept. 11, 2009 for materials for Lakeview access road. The $75,000 contributions to Appanoose All Play, Inc. came out of the Special Revenue, Physical Plant and Equipment Levy fund.

The school district's $50,000 contribution was the same amount of PILOT revenue the district would receive from Centerville as part of a settlement agreement both parties reached in September 2006. The city paid the school district the money in March 2009.

The reaudit points out $50,000 PILOT revenue was recorded in the proper account — the school district's General Fund — and the contribution to Appanoose All-Play was paid from PPEL and "did not result in a 'zero' effect on District finances."

The $50,000 school district contribution was to help Appanoose All Play obtain grants for the project and in exchange the district would be able to use the soccer fields.

The $25,000 the school district contributed to the project was to be used to finish the access road to the sports complex. The reaudit questioned why the school district paid the $25,000 to Appanoose All Play rather than Centerville when it was the city that constructed the Lakeview access road as part of the district and city settlement agreement reached in September 2006.

The reaudit points out because "public funds were contributed towards the construction of this project, the requirements" of Iowa Code that covers bidding for public construction should have been complied with.

The reaudit recommended and the district agreed to "exercise caution and to consult legal counsel in regard to future contributions of public funds and the mixed use of public and private funds for joint projects. The District will ensure compliance with statutory requirements, including competitive bidding requirements."

A copy of the reaudit can be found at the school district's business office, the state auditor's office and web site, http://auditor.iowa.gov.