Positive Audit for 2016

Nine years ago, the audit report documented an unreserved fund balance deficit of $1.4 million.

The audit also documented a deficit of $564,000 in the facility’s operating capital reserve. The school district entered into a financial condition called statutory operating debt, the school district’s version of bankruptcy. These were tough times within the school and within the community.

The school board adopted a resolution approving a SOD recovery plan on Jan. 14, 2008.

There were nine goals established by the school board: 1. Approves the SOD Plan and accompanying SOD Recovery Spreadsheet and transmits the same to MDE; 2. Agrees to reduce current year expenditures by all legal means possible; 3. Agrees to discontinue the practice of approving deficit budgets; 4. Creates an unreserved fund balance target of 8 percent within 7 years after the removal of SOD; 5. Agrees to a “dollar for dollar” cut in current and future budgets to respond to a negative variance in revenues and expenditures as displayed in the SOD plan; 6. Agrees to remove the condition of SOD by the end of FY 2010 and achieve a positive fund balance by FY2011; 7.)Agrees to the removal of operating capital debt; 8. Requests specialized training as appropriate; and, 9. Submits preliminary budgets to MDE showing the discontinuance of deficit spending prior a formal budget adoption until all negative fund balances are removed.

The school district exited from statutory operating debt on June 30, 2009. Seven years later, with the June 30, 2016 audit, the school board attained its final goal 4 (Creates an unreserved fund balance target of 8 percent within seven years after the removal of SOD).

The June 30, 2016, audit report shows an unreserved fund balance surplus of $2.7 million or 12 percent of expenditures.

The state’s average school district fund balance is 21 percent. The audit also shows an operating capital surplus at $650,000. We are excited in reaching our goal! This good news completes the statutory operating debt-recovery plan within the established timeline adopted by the School Board in 2008.

Developing a plan

The school district is now faced with new, and quite different, challenges than it had eight years ago. With the expected decline in students, it was planned to close the McKinley Elementary School and fit grades K-4 in Adams and Cleveland Elementary buildings.

The fifth grade students would move back to Kennedy Secondary School in this plan.

The current fourth graders lead a different trend — every class in grade K-4 has 190 students or greater.

We have had to move the Otter preschool to the Heritage Building to make room for the additional sections in grades K-2.

The latest census data shows a continuation of strong class numbers in the 190 student range.

This growth will lead to additional challenges at the secondary level in the near future. We are also experiencing a more diverse population, requiring additional programs to meet the needs of our students.

Over the next few months, the district will be working with staff and community to get input on student placement in our current school buildings. The key question we will be asking is, “What is the best plan for our students?”

Staff will be meeting starting on Nov. 4 to begin the development of a student placement plan.

On Nov. 21, the citizen-based district curriculum review and advisory committee will review the progress to date.

A late January meeting with the community is being planned to gather additional input.

The goal is to have a student placement recommendation presented at the Feb. 13 school board meeting and approval of the plan on Feb. 27.

The district staff would have from March to August to communicate and implement the student placement plan.

If you have any ideas or concerns, please contact my office.

Jerry Ness is the superintendent of Fergus Falls Public Schools. His column appears every Wednesday.


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