VIRGINIA- ISD 2142 school board members received a double dose of good financial news Tuesday at a combined special and working meeting at the district office in Virginia.
Two sets of district bonds totaling $9,043,000 were sold Tuesday morning at favorable interest rates that generated more than $300,000 above what was anticipated.
“The market was very competitive this morning,” Ehlers & Associates representative Matthew Hammer said. “People are wanting to get into municipal securities at this point in time with the uncertainty in the financial markets we’re seeing. We received outstanding results.”
Interest rates substantially lower than those projected in a January pre-sale led to an overall windfall of $340,000, to be applied to the projects specified in bond authorization resolutions.
A breakdown of the first set of $3,888,000 of general obligation notes, capital facilities and tax abatement bonds indicates the following intended uses: $515,000 for office, technological, and other capital equipment; $1,495,00 for capital improvement projects at various school sites; and $1,870,000 for parking lot reconstruction and improvement projects at various school sites.
Proceeds from an issue of $5,155,000 of facilities maintenance bonds will be used for various drainage, deferred maintenance, indoor air quality, and health and safety projects. The projects are part of the district’s ten-year facility plan. An additional benefit of the sale was a reduction of $418,000 in principal and interest.
Greg Knutson of accounting firm Walker, Giroux & Hahne was present to review findings from the district’s annual financial audit for fiscal year 2019.
There were two findings from the audit which required specific action plans to address them, although neither were considered to be material findings, which are considered the most serious level of deficiency.
One concerned late payment of bills. Minnesota law requires that invoices be paid within 35 days of receipt, and auditors found numerous violations in the samples they examined.
“Of the 25 disbursements we tested in this area, eight were not paid within 35 days,” Knutson said.
Business manager Kim Johnson said some corrective actions were implemented within two weeks of the receipt of the audit findings in mid-December.
“We’ve already put some processes in place to help our accounts payable person who is overloaded,” she said. “We’ve moved all of our purchase orders to our district secretary to free up some time for our accounts payable person. We’re doing some procedural changes to help us reduce the amount of late payments.”
Another change is in how invoices are logged and tracked. Formerly they were logged according to when they would be paid. Now they’re logged when they’re received, Johnson said.
“That will allow me to run reports right in the system to see if those invoices have been paid,” she said. “Now we have to monitor the system to make sure those changes are effective.”
Johnson noted that while the goal is to reduce late payments, they can’t be entirely eliminated.
“If (the accounts payable person) is investigating a payment, it could indeed be beyond 35 days,” Johnson said. “We have some invoices we’ve already received that are not yet due, they’re for next year. I’m not going to pay an invoice in March for fiscal year 2021.”
A second finding was a familiar one related to cash handling at the schools not being sufficiently segregated. Recommended practice is to have separate individuals receive, account for, disburse, and deposit funds.
“The condition is due to the limited number of personnel in school offices,” Knutson said. “In the business office there is adequate segregation.”
Johnson responded.
“That’s actually why we’re kind of tough on processes and procedures for the schools as far as petty cash, student activites and community ed,” she said.
Acknowledging that the only way to fix the issue would be to hire additional staff, Knutson reinforced the need for strong oversight.
“It is critical to follow up on them and be tough,” he said, “because the default is to bypass controls. I’m not seeing that here.”