Sulphur Springs Independent School District received the top opinion on its annual financial compliance rating, receiving a good report across all areas evaluated.
Robert Lake of Rutherford, Taylor and Company PC told school trustees at their regular monthly meeting that it is the company’s opinion the district’s financial information presented a fair picture of the district’s assets, liabilities and operations for fiscal year 2018-19, which concluded Aug. 31, 2019.
“It’s what we call an unmodified report; it’s the best report you can receive,” Lake said.
He said the RTC also compiled two reports regarding SSISD’s compliance and internal controls.
Lake said he’s happy to report that auditors “did not identify any kind of material weaknesses or significant deficiencies in internal control, nor did we find any kind of non compliance issues.” He said SSISD received the best report that can be received in this area as well.
Discussion and analysis
He noted that the discussion and analysis portion of the report reflects accounting changes made last year, so there won’t be comparative data for all information.
“The most important thing is last year’s numbers now come up to the numbers that we’re comparing to. So, it’s going to look like you spent $50 million more this year than you did last year. The reality is you are not. It’s just a hold over from that accounting change that happened,” Lake noted.
The district’s total assets previously totaled $94 million. This year past year, they are $93 million, a slight decrease total overall. The total outflows and total inflows relate to those pension costs that have been dropped into district financial statements, the Rutherford, Taylor and Company representative told the school board at their Dec. 9 meeting.
Liabilities increased due to the proportionate share of the pension liability and other post-employment liabilities (OBET). He said these are things that the district “just has no control over; they just show up in your financial statements.”
The district’s total net position decreased a little from $7.8 million in fiscal year 2017-18 to $7.5-7.6 million in FY 2018-19. That’s to be expected from time to time due to depreciation and as debts are paid off, Lake noted.
“It’s not a real big change. It kind of really shows that everybody’s trying to take care of the finances and in a nice efficient manner. As we get a little later in the report, I want to make a comment to say that if I was a taxpayer of the district, that’s exactly the way I would want it to turn out every year. Y’all are right at zero, so great comment in that regard,” Lake told the trustees.
SSISD had a good year as far as tax collection goes, Lake said. A little over 99 percent of the current taxes were collected, a rate that increased to more than 100 percent when penalty and interest were added.
He pointed out that one place in the report seems to indicate SSISD brought in 23.5 percent more in additional revenue. That’s not the case, Lake said. The district did receive more revenue, but not 20-24 percent more. The district spent 48 percent more in expenses in 2018-19 than in FY 2017-18.
The district brought in more than $51 million in revenue, and spent a little over $51 million, for a $246,000 loss for the year according to the government-wide numbers, Lake reported.
Full accrual accounting, however, includes depreciation and other documents typically shown by corporations’ financial statements.
Local property taxes account for 34 percent of the total revenue. State aid accounts for another 42 percent.
“I think we’re all hoping that this same report next year will show maybe not a significant increase but an increase as we go forward, because of the compression of tax rates; we would expect to see that the property taxes would be a smaller percentage and the state share increasing,” Lake told the trustees.
The district spent 59 percent on instruction and instruction related expenses.
“I can tell you that y’all are a little on the high end there, compared to a lot of the districts we do. Every district is unique and different, but to show almost 60 percent basically into what goes into the classrooms is a great mark, I would think,” Lake said.
In the financial statements, the net pension liability is a little over $13 million and the OBET liability is almost $20 million.
“They are somewhat significantly higher in some cases, but that’s pretty much generically across the entire state. As they continue to do actuarial studies on those numbers, and refine the numbers, and what comes up there, we would expect at some point those numbers will level off, unless you’re growing a lot or some other effect that has on your liability,” Lake said.
The portion of the audit that shows finances on a month-to-month basis showed the district had almost $13 million in cash in the general fund at the end of the year and in the $3.5 million debt service fund. SSISD’s total for all funds for the year was a little over $17 million, Lake reported.
In total assets, SSISD had $15 million in the general fund and $20 million across all funds.
Liabilities were about the same, with accrued wages a little higher due to salary increases, beginning school a few days earlier an things of that nature, the auditor explained.
The bottom line fund balance in the general fund was $12.7 million, and debt service was less than $3.5 million, for a total of $16.9 million across all funds.
Ultimately, the general fund generated $37.5 million in revenue, $49 million across all funds. The district spent $37 million, almost $38 million in the general fund, $49 million across all funds. A capital lease for new computers and other things.
“As a tax payer you get people on both sides of the fence. Some people think you’re charging them too much and saving the money, and then you get other people that say you’re not spending the money the way you’re supposed to be spending it. If you can spend $38 million and come out $8800, I’d say that’s a pretty wise use of what you’ve generated in revenue. I don’t see that very often that close. I think it’s a great idea,” Lake said. “We look across all the funds there. We still generated a little less than a little of $1 million in fund equity.”
Looking at the district’s long-term obligation activity, the district started off with a little more than $59 million in debt. The district took out a capital lease for the new computer purchases, paid down the debt by $3. 3 million, to finish the year owing just over $56 million on debts.
State aid reconciliation has four major state sources of revenue from the school. The way Texas Education Agency handles funding, there are typically prior year settle ups to discern, then August instructional days. He said the state owes SSISD $831,000 in payment. The district didn’t over estimate attendance numbers, so SSISD didn’t have to make a payment back to the state.
In the budgetary comparison, the total was $758,000 under the overall budget for the year. The left a fund balance $571,000 higher than anticipated.
Lake said FY 2018-19 was a another good year as far as delinquent tax collections go. SSISD started the year with $996,000 in delinquent taxes, then levied almost $17.5 million and collected a little more than that, for a total of $926,000 in delinquent tax collections.
The district benefited from almost $6.1 million in federal funding for the year.