“Taking into consideration the decreased revenue and budget cuts, the district has done as well as you could hope for,” stated Barry Evenstad, C.P.A. and partner with Hoffman Brobst, PLLP, as he explained the audit report for the fiscal year ending June 30, 2009 to the YME School Board. The figures he presented support his evaluation. The General Fund reported an unreserved, undesignated fund balance for 2008-2009 of $779,072 which is an increase of $210,728 from the prior year unreserved, fund balance of $558,344.
“The revenue was 1 percent more than expected and the expenses were 1 percent less than estimated,” explained Evenstad. He went on to compliment the board for being good stewards and at the same time increasing the Unreserved Fund balance. “A healthy fund balance will help reduce the costs of borrowing money in the 2009-2010 school year and incurring interest costs.
Even though Evenstad told the board that the district is doing a good job staying ahead the curve, there have been dangerous obstacles placed in the district’s path in the form of state aid payment shifts and a 50 percent tax shift. Governor Pawlenty has shifted the state aid payment for districts including YME from 90-10 to 73-27. Bottom line: that shift in state aid payments will withhold 17 percent more dollars that should be received in the 2009-2010 fiscal year until the 2010-2011 fiscal year. Evenstad told the board that will amount to a shortfall of cash in 2009-2010 to about $1 million. In Evenstad’s explanation he was not confident that the state would be in a financial position by November of 2010 to actually send the district the 27 percent of state aid that it promised.
In addition to the shift of state aid payments, Evenstad explained to the board the implications of a 50 percent tax shift that will affect the cash flow of the district. He explained that the district will receive local tax dollars from the counties in May and June of 2010. In a normal year those tax dollars are not recognized as revenue for the school until the new fiscal year begins on July 1, 2010. This year, however, by law the governor has mandated that schools recognize those local tax dollars as revenue when they are received. The 50 percent tax shift forces YME to recognize the revenue in May and June of 2010, the 2009-2010 fiscal year. That shift allows the state to withhold a designated amount of cash state aid payments from the school that will amount to about a half millions dollars for YME. This is the third time the state has implemented the 50 percent tax shift.
“The tax shift is a theft of cash. It’s an accounting gimmick. It amounts to a one-time fix for the state,” Evenstad told the board. He cautioned the board that they should be prepared to borrow as much as $1.5 to offset the state aid payment shift and the 50 percent tax shift.
LeeAnn Boushek, YME Financial Officer, told the board, “We’ve started the process to borrow just under $600,000 when we applied for aid anticipation certificates.” Boushek anticipates that the cash could be available to the district, if needed, by the end of December.
When Board Chair Elmo Volstad asked Evenstad, “What changes in revenue could we expect in the future?” Evenstad’s response was not a positive one.
“In my opinion to expect any increase in general funds in the next three years – probably not.”
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“Taking into consideration the decreased revenue and budget cuts, the district has done as well as you could hope for,” stated Barry Evenstad, C.P.A. and partner with Hoffman Brobst, PLLP, as he explained the audit report for the fiscal year ending June 30, 2009 to the YME School Board. The figures he presented support his evaluation. The General Fund reported an unreserved, undesignated fund balance for 2008-2009 of $779,072 which is an increase of $210,728 from the prior year unreserved, fund balance of $558,344.
“The revenue was 1 percent more than expected and the expenses were 1 percent less than estimated,” explained Evenstad. He went on to compliment the board for being good stewards and at the same time increasing the Unreserved Fund balance. “A healthy fund balance will help reduce the costs of borrowing money in the 2009-2010 school year and incurring interest costs.
Even though Evenstad told the board that the district is doing a good job staying ahead the curve, there have been dangerous obstacles placed in the district’s path in the form of state aid payment shifts and a 50 percent tax shift. Governor Pawlenty has shifted the state aid payment for districts including YME from 90-10 to 73-27. Bottom line: that shift in state aid payments will withhold 17 percent more dollars that should be received in the 2009-2010 fiscal year until the 2010-2011 fiscal year. Evenstad told the board that will amount to a shortfall of cash in 2009-2010 to about $1 million. In Evenstad’s explanation he was not confident that the state would be in a financial position by November of 2010 to actually send the district the 27 percent of state aid that it promised.
In addition to the shift of state aid payments, Evenstad explained to the board the implications of a 50 percent tax shift that will affect the cash flow of the district. He explained that the district will receive local tax dollars from the counties in May and June of 2010. In a normal year those tax dollars are not recognized as revenue for the school until the new fiscal year begins on July 1, 2010. This year, however, by law the governor has mandated that schools recognize those local tax dollars as revenue when they are received. The 50 percent tax shift forces YME to recognize the revenue in May and June of 2010, the 2009-2010 fiscal year. That shift allows the state to withhold a designated amount of cash state aid payments from the school that will amount to about a half millions dollars for YME. This is the third time the state has implemented the 50 percent tax shift.
“The tax shift is a theft of cash. It’s an accounting gimmick. It amounts to a one-time fix for the state,” Evenstad told the board. He cautioned the board that they should be prepared to borrow as much as $1.5 to offset the state aid payment shift and the 50 percent tax shift.
LeeAnn Boushek, YME Financial Officer, told the board, “We’ve started the process to borrow just under $600,000 when we applied for aid anticipation certificates.” Boushek anticipates that the cash could be available to the district, if needed, by the end of December.
When Board Chair Elmo Volstad asked Evenstad, “What changes in revenue could we expect in the future?” Evenstad’s response was not a positive one.
“In my opinion to expect any increase in general funds in the next three years – probably not.”
Calendar changes
YME Superintendent Al Stoeckman shared that school districts belonging to the Minnesota River Valley Education District (MRVED) are planning to establish three common staff development days in 2010-2011. In addition he plans to pursue, along with other MRVED schools a common “flexible learning year calendar” that begins prior to Labor Day. The new calendar would require approval from the Minnesota Department of Education.
YME report to air
on KDMA/KKRC
Beginning Wednesday, December 16, KDMA/KKRC will air a YME Superintendent’s report. The report will air at 6:50 a.m. the Wednesday following the school board meeting. The next report is scheduled to air on Wednesday, January 13 at 6:50 a.m.
Action Items
• The board renewed the MASA Subscription for 2010
• The board approved a resolution to support PACT 4
• The board approved a resolution for Al Stoeckman to pursue application to Race to the Top
• The board approved the 2009 Audit Report
• The board certified the 2009 pay 2010 levy
Personnel Items
• The board approved a medical leave of absence for Linda Richter
• The board approved a long-term substitute contract for Danae Rupp
• The board approved a contract with Rich Jepson as 7th grade girls basketball coach
• The board approved a contract with Jake Suter as JH softball coach
• The board approved a contract with Nick Richter as JH softball coach
• The board approved Tom Jacobson as a volunteer assistant wresting coach
• The board approved Brad Muhl as a volunteer assistant wresting coach.
