TR audit: District moving in right direction

BROSELEY -- Despite another year of deficit spending, the Twin Rivers R-X auditor said the district is starting to trend in the right direction.

The school board received the 2018-19 audit at a meeting Thursday.

During that year, the district ended up with a $852,015 deficit, according to the audit. At the end of June, the district’s unrestricted net position was $917,823.15.

This is the second year in a row where the district ended with a deficit.

In the 2017-18 fiscal year, it was a $856,000 deficit, reducing its fund balances from $2,425,843.72 to $1,569,838.65.

However, auditor Dwayne Clark, CPA, of Hayti, said those years are “water under the bridge” and that it sounded as though the district is trending in the right direction to start recovering this year.

“You’re to the point to where you certainly don’t need to deficit spend more, and it would be nice to kind of gradually build that back,” Clark said. “When you were talking about the expenses now compared to last year (earlier in the meeting) and it looked like your total expenses are down roughly $150,000 compared to what they were last year, that sounded really good to me.

“...It sounds to me like you’re now making every effort to reduce expenses.”

Clark pointed out the district receives the audit about six months after the year ended. With the year half over, correcting can be near impossible, especially with school districts since teachers already are under contract and positions are filled.

“At that point, it’s almost like the year is fixed,” he said.

Board member Lee Wright said he felt as though the board didn’t completely understand the district’s financial situation until seeing the audit report last year, when Clark emphasized the need to cut expenses.

“I don’t think they realized what was going on until last year’s (audit),” Wright said. “When you made your statements last year, I think you opened up a lot of eyes. It took a group effort, but I think we’re doing so much better.”

After receiving last year’s audit, the board started a committee to look at cutting expenses. The district implemented a hiring freeze on some positions, started negotiating some bills such as for phone service and changed the food service plan.

At the November board meeting, board secretary Tonya Jones said, a change to the district’s trash services will save about $800 a month.

Some of the savings also came from school field trips being canceled due to the COVID-19 pandemic this year.

“We didn’t anticipate closing that gap in a half a school year, and it looks like we’re doing a pretty good job of it,” Board President Billy Watson said. “We anticipated doing it over three or four years ... We’ve done a lot of things that were painful, but we’ve had the backing of the administration, the kids and the teachers. Everybody gets it.”

Watson said members of the public are either worried about the district’s financial situation or saying “it’s not as bad as they say it is.

“The balance is for us to make sure that we understand, and we finally are getting where we need to go.”

All of the board members expressed feeling better about the district’s financial situation now than they did receiving the audit last year.

Clark acknowledged it can be a challenge for school districts, especially in small communities, when they need to start making cuts and tightening the budget because the impact goes beyond the school.

“Those are impacting people’s jobs in the community,” he said. “It’s very hard to do. But, on the other hand, when your state revenue goes down $600,000 a year in just a matter of a couple of years. I mean, you’re to the point now where you were forced to really do something.”

Watson said he feels as though the district has the right people in leadership positions at this point with the new superintendent Dr. Ben Johnson, and Jones “scrutinizing every dollar” to make the necessary changes.

Clark recommends districts keep enough in their funds to cover expenses for at least three months without revenue coming in. While Twin Rivers is not at the mark at the moment, Jones said, the district has enough for over two months worth of expenses.

Additional notes

During the 2019-20 fiscal year, the district received $5,487,480 in tax revenue between local, county, state and federal funds.

Clark found four discrepancies within the district’s operations. The first was the deficit spending, which the district is taking steps to avoid in the future.

He also recommended a better segregation of accounting duties. According to the audit, the district plans to provide additional training to staff members to help address this concern.

The audit recommends presenting additional information on the facts and reasoning behind increases in expenditures when the board needs to make amendments to the budget and to ensure financial information is regularly updated on the district’s website.

According to the audit, the district plans to make both adjustments going forward with documents added to the website at least once a quarter.

Clark said he plans to start his retirement process, which includes not conducting audits anymore. The board will start the search for a new auditor to present the 2020-21 audit next year.

The board is expected to revisit the year’s budget at the Jan. 21 meeting. Members approved a budget over the summer with a plan to revisit it since Johnson hadn’t started in his position yet.

“It’s a great time (to do that),” Johnson said. “It’s halfway through the fiscal year. It’s something we can do this time every year, revamp, revise.”