Oysterponds school officials describe state audit as ‘extremely good’

04/09/2014 8:00 AM |
 Tonight's Oysterponds school board meeting is at 7:30 p.m.

The Oysterponds school board held its regular meeting Tuesday night. (Credit: Jennifer Gustavson, file)

Oysterponds Elementary School officials are describing a recent state audit of the district’s finances as a positive experience. The new report found the district has maintained an excessive fund balance over the last four fiscal years.

During the school board’s regular meeting Tuesday, Superintendent Richard Malone said he feels good about the audit, adding the issues brought up in the report are being addressed.

“I’m very happy for you as a board that we’re in this financial situation at this time,” he said. “I think we’re in good shape.”

The pre-K through sixth-grade district in Orient has experienced surpluses totaling about $164,000 between the 2009-10 and 2012-13 school years, the report states. Although auditors say Oysterponds moved nearly $1.3 million of surplus funds into its operating budget during those four years, nearly $1 million of the district’s fund balance during that time period went unused — resulting in the accumulation of 11 percent of the ensuing years’ budget, or about three times the amount by law.

“These ongoing budgeting practices resulted in taxpayers paying more than necessary to sustain district operations,” the audit read.

Board president Dorothy-Dean Thomas said in an interview prior to the meeting she believed the findings aren’t as serious as they appear.

“There wasn’t anything that was surprising really,” she said. “They were very fair. They were very thorough.”

Ms. Thomas said the district’s budget surplus began nearly a decade ago and was caused by a “miscalculation” in the school budget due to an unexpected drop in costs. Rather than reduce taxes, the school board at the time built the surplus into the budget to give the district extra flexibility, she said.

The 4 percent excess in fund balance allowed by state law doesn’t allow Oysterponds to keep enough in its general reserves to deal with unexpected costs like damages or increased costs with special education, Ms. Thomas said.

The report also found the school board improperly appointed its president as the sole signatory on district checks under $5,000.

Current board president Dorothy-Dean Thomas replaced Deborah Dumont in 2013.

“This board action allowed one of its members to, in effect, also act as treasurer for the purpose of disbursing district funds, which is prohibited by education law,” the audit reads. “By usurping the treasurer’s disbursement functions, the board has diminished an important segregation of functions and compromised the checks and balances that are designed to help ensure that district moneys are properly expended.”

Ms. Thomas said the check decision was suggested to the board in a previous audit. In a letter from Ms. Thomas and Mr. Malone dated March 18 attached to the state report, the district has agreed to follow through with the audit’s recommendations of having the district treasurer sign checks under $5,000.

The audit also found the district’s IT system and electronic data are at risk because the school board has failed to adopt a disaster recovery plan and a breach notification policy.

Ms. Thomas said those concerns have been addressed in the district’s recent technology upgrade plan.

As for the district’s budgeting practices, Ms. Thomas and Mr. Malone wrote in the letter budgeting tuition for its secondary students over the last two years has also resulted in an unexpected operating surplus.

In order to reduce the district’s fund balance, the school board developed a plan to establish a capital reserve fund. The proposition to adopt the fund has been voted down during the last two annual budget votes.

The school board has approved putting the capital fund proposition for another vote May 20.

“I certainly think we did the best with the tools that were given,” Ms. Thomas said in an interview. “It was actually an extremely good audit,” she said.

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