Auditor recommends school district spends $450,000 from food service fund – Detroit Lakes Tribune

Lake Detroit — The Lake Detroit Board of Education was given an overall “clean health card” by Eide Bailly audit manager John Hagen and told to spend about $450,000.

At the school district’s monthly meeting on Monday, Dec. 19, Hagen explained that the district’s foodservice fund requires a reserve of about $700,000, but an audit found that the account totaled about $1.16 million. was shown.

The increase in funding may be due to free meal programs offered to students in the past few years due to the COVID-19 pandemic, Hagen suggests.

The school district’s food service fund should have about $700,000 in reserves, but the audit showed that the accounts totaled about $1.16 million.
Contribution / Detroit Lakes Public Schools

Hagen said the $450,000 more than the recommended funding limit should be spent, and some schools use such funds to buy additional food, complete kitchen remodeling projects, He added that he is upgrading equipment.

After the meeting, the school district’s director of finance and operations, Jason Kuhn, was contacted. He explained that school districts should spend about three months’ worth of food service funds. Beyond that amount, the Minnesota Department of Education asks school districts to develop a plan to spend a portion of the funds.

Kuhn said the reason for the food service fund’s strong balance has to do with catering. He explained that the school district provides catering services in his MState and Muhube-Otwa.

Kuehn said there are strict restrictions on how the funds can be used, and unfortunately reducing student meal costs or resolving missing accounts is not an option.

He explained that the funds are being used to upgrade school facilities, upgrade high school departments, and pay for increased wages and benefits. Additional funding has also helped the district cope with rising food prices and disruptions to the food supply chain in recent years.

The district’s Community Service Fund also increased, jumping from $486,987 in 2021 to $652,140 in 2022. Auditors noted that the increase could be due to higher fees or increased participation in offerings that include school preparation programs.

Hagen also reviewed the district’s revenues, expenditures, and general fund.

The district reported expected revenue of $40.9 million in 2022. Actual earnings budget came in at $38.9 million for him, 5% below projections. Because the school’s fiscal year begins in July, school districts often set initial budgets before they know student numbers and other funding factors. Districts revise their budgets when more concrete numbers are presented.

A school district’s income is closely related to the number of students enrolled. The school district’s student count was reported at 2,866 he in 2013. Enrollment numbers bounced back to 3,016 in 2017 and declined slightly through 2020. By 2021, student numbers have fallen to 2,703, his lowest in a decade. In 2022, there will be an upward swing with 2,728 students.

In the spending category, the district projected spending of $40 million. But the audit showed his actual spending was nearly 6 percent higher, at $42.2 million.

As for the fund balance, the audit was reported after other sources of funding were accounted for, and the district had a positive fund balance of $13.8 million. Positive cash balances contribute to good bond ratings, generate investment returns and provide a cushion against unexpected earnings shortfalls, auditors explained.

Unallocated funds balance.jpg

The school district has a policy of maintaining a minimum unallocated funds balance of approximately $5 million.
Contribution / Detroit Lakes Public Schools

District finances include several funds, one of which is the General Fund. There are several categories of general funds, including funds allocated and unallocated for specific expenses, or “rainy day funds”. The school district has a policy of maintaining a minimum unallocated funds balance of approximately $5 million. The 2022 audit reported that the Rainy Day Fund met its target amount, with an unallocated fund balance of $5.14 million.

After all funds were reviewed, Hagen said the district received a “clean health” in its audit, but there were findings. He explained findings such as preparation, key journal entries, and separation of duties.

“I’ll lump the first two together…” he said, explaining that the company had to help prepare statements for the audit, including mandatory statements and journal entries that the client was expected to make. Did.

He added that the segregation of duties findings “reduce to the fact that the finance department does not have enough hands and eyes”. I have. This cost is not a viable option for smaller districts, and Hagen is one of the reasons the findings are common.

Hagen explained that there is also one finding from inactive student activity accounts.

Fund balance.jpg

The Detroit Lakes School District has reviewed its 2022 audit, including a 10-year history of General Fund balances.
Contributor/Detroit Lakes Board of Education

“There were some student activities throughout the year that we didn’t have payments or receipts for,” Hagen said, noting that it required filling out forms. He added that the finding is more common in districts these days, as meetings and fundraising activities are restricted, such as.

“For the district, this is a very easy fix,” Hagen said.

Hagen added that the school underwent an additional audit because it spent more than $750,000 in federal funds. He explained that when that happens, other audits are automatically required.

“You guys almost always exceed that amount because of the size of the district,” Hagen said. “That is why each year we perform a separate audit and series of procedures that target only the district’s federal funds. adjusted.”

Programs requiring additional audits included funds received for food service and ESSER (COVID-19 related funds). His two accounts represent approximately $3.4 million of the district’s total federal award of $5.3 million.

“We gave separate opinions on both of these federal programs and districts received unchanged or clean health bills on both of these federal programs,” Hagen said.

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