BY JENNIFER SOLIS
---- — WEST NEWBURY – The internal controls needed to detect and prevent significant financial problems for the Pentucket Regional School District appear to be in place, according to a new report from the district’s auditor. However, in the report’s management letter, auditors identify several “opportunities” for school leaders to positively tweak controls and operating efficiencies.
The report begins by highlighting an issue pertaining to decreases in the school lunch program -- a finding that was identified in a previous year’s audit but remains unresolved. Revenues from lunch sales dropped by $56,000 in fiscal year 2011. The district raised fees the following year, but the program’s fund balance remains drastically low at under $10,000. And a plan to assess the program’s share of employee benefits was not executed.
Auditors stress the need for an annual budget for the lunch program, developed with input from those responsible for meeting its goals, that facilitates monitoring projected and actual operational expenses throughout the year. “This would allow management to better respond and plan for potential shortfalls as well as reduce the future impact on the district’s general fund,” the audit report states. Under state law the school lunch program must either be profitable or funded by the district.
In a second recommendation auditors suggested that in order to comply with the state’s annual reporting requirements set by the Governmental Accounting Standards Board, Pentucket must implement procedures to account for “material fixed asset additions, deletions, disposals and transfers” and maintain a fixed asset management sub-system for all fixed assets.
The report points out that the district had a $93,000 deficit in its COBRA and retiree insurance withholding accounts at the end of the fiscal year -- something that can happen when employee coverage is not discontinued when it should or the former employee is not being charged enough to cover their share of premiums. The auditors said the district should reconcile the deficit balance to the amounts that have been collected and paid out, then implement a procedure to address the problem going forward.
Conducting annual audits on student activity funds that are formally reported to the school committee is another good idea, auditors says. State law requires the audits and wants them to include a reconciliation between cash balances and bank statements; evidence of compliance with school committee procedures; and supporting documentation for randomly selected samples. The auditors warned that by not reconciling the departmental records for student activity accounts with the bank balances and the general ledger on a regular basis, there is an increased risk of misuse that “could lead to undetected permanent deficits.”
At a meeting with the School Board last Tuesday, Pentucket Business Manager Michael Bergeron reported that he has already planned on an audit of student activity accounts next year.
Auditors say the district should also plan to obtain an updated actuarial valuation for its Other Post Employment Benefit Obligations in time for next year’s audit, and they noted that documentation is needed to certify that an employee whose position is funded through a major grant -- such as special education or the federal educational jobs program -- is meeting the requirements of the grant.
Powers and Sullivan warned that major school building projects underway at the elementary schools will negatively impact the district’s financial position -- but only temporarily. The projects, which tapped state Green Repair funds, required the district to borrow money that will eventually be paid by the towns through their community assessments.
In other business on Tuesday, the school board tabled a discuss on a request from Merrimac officials to enter into a partnership with an energy services company to seek efficiencies in their town facilities, including the elementary schools. Members wanted more time to review the proposal.
The committee briefly reviewed a proposed process for evaluating the superintendent that is based on the state’s new educator evaluation system. They announced that a new paraprofessional contract had been ratified and accepted donations from the Merrimac PTO for supplies and equipment totaling $4,816; and from Groveland Youth Soccer for equipment totally $300.
Last Tuesday’s meeting was held after the committee’s regular business meeting from the previous week was cancelled due to inclement weather. When Chairman Brian Page called the meeting to order, both Jill Eicchorst and Chris Reading of West Newbury as well as Joe D’Amore from Groveland were not present. A question on quorum arose, but the committee decided it was not an issue. According to the regional agreement that binds the district, “a quorum to conduct business at regular meetings shall consist of a simple majority…and special meetings shall require not less than two members from each of the towns.” Eicchorst subsequently arrived after the meeting was underway.
At the end of open session the board went behind closed doors to discuss non-union contract negotiations.