Litchfield Public Schools’ finances look solid, according to an audit discussed during the school board meeting Nov. 23.
The audit, which encompasses the fiscal year ending June 30, 2020, shows the school district with total assets of about $63 million. That’s up about $34 million from 2019, almost entirely because of the influx of revenue that resulted from the issuance of capital bonds, according to Justin McGraw of Conway, Deuth & Schmiesing, who presented the audit report. Those assets will be spent down as construction at district buildings is completed.
The district’s average daily membership, or enrollment, was 1,562 for fiscal year 2020, but the district has projected a 2.5 percent to 3 percent decline in 2021, which will affect its revenue.
The district’s projected revenue for 2021 is $19,206,724 with projected expenditures of $18,729,058.
The majority of the district’s revenue comes from the state, which provided 84.26 percent of its revenue in 2020, with local property taxes providing 9.09 percent.
School food service is projected to have a fund balance of $192,043 in 2021, up about $14,000 from the current fiscal year. The Community Service, or Community Education, fund balance is projected to drop by nearly $20,000, to $107,852 in fiscal year 2021.
McGraw acknowledged the challenges that the coronavirus pandemic has put in front of the school district, as enrollment has dropped and other changes affect the financial picture.
“I don’t envy you at all, trying to budget in the era of COVID,” McGraw said, “because who knows what could happen.”
The audit uncovered no significant issues, though it mentioned a need for greater internal control. This has been mentioned in past audits, pointing out the need for a segregation of duties in the district business office that would allow for greater checks.
“Some people are asked to wear a lot of different hats,” McGraw said. “That creates a fraud risk.”
McGraw added, however, that segregating duties so much would be difficult from a staffing standpoint.
“We do apply mitigating factors to cut the risk,” district Business Manager Jesse Johnson told the board. “No matter what controls we put in place, it does not take away my ability to create a voucher (and) cut a check.”
Still, while that’s a possibility, Johnson said, “I would suggest it would not go unnoticed” for more than 15 to 30 days.
Without hiring or outsourcing, which would create additional expense, Johnson said, the internal controls compliance is likely to continue to show up on district audits.
“We do have cross training. We’ve done all that, but we don’t shift responsibilities,” Johnson said, because that isn’t efficient. “We do work with vendors to enhance our controls, as well.”
