ANSON — Director of non-profit governmental services with Strickland Hardee PLLC Nicholas Wicker updated the Anson County School Board on his firm’s findings regarding the school system budget audit.
Opening with good news, Wicker stated, “For your basic financial statements we express an unmodified opinion. That is the best opinion that you can get, that is what you really want on your basic financial statements.”
Major programs tested include the special education cluster, COVID-19 education stabilization fund, and the state public school fund.
“We also expressed an unmodified opinion there. That is what you want, so great job there,” Wicker said. “During the year, we did notice one material weakness and it was for an excess of expenditures over appropriations that actually happened and the school food service fund and the general fund. We found the variance around October, and it was too late to bring a budget amendment at that point. North Carolina general statutes require that we assess that as a material weakness in the financial statements.”
Responding to a question put forth by Linda Davis regarding spending more than was purchased, Wicker said “It was actually in the general fund and the school food service fund, in both of those funds, there were over expenditures.”
Wicker said school food service fund is slightly different from the general fund in that the school food service fund is reported as a proprietary fund in the school system’s financial statements. Determined that no changes could be made to adjust the material weakness in the School Food Service Budget, and the material weakness discovered in the general fund were found too late, Wicker stated, “We did not note any significant deficiencies and we noted no other recommendations.”
Simplifying the information, Strickland Hardee PLLC broke up the governmental fund balance by fund balance classifications.
“Your restricted fund balance had a decrease of $258, 136 as compared to the prior year. That is primarily related to the reduction in the restricted fund balance and in your other special revenue fund. The assigned fund balance did not change. Your unassigned fund balance had a decrease of $372, 337, so a total decrease of $630,474,” Wicker said.
Dr. George Truman pointed out that restricted funds must be used for a specific purpose, and unlike the general fund, monies in the restricted fund are carried over from child nutrition or the planetarium.
“Those are not funds that we can use in any other way, so the actual fund balance we would have would be more in line – with the unassigned [fund],” said Truman.
Wickers said those funds are set up that way so governing bodies do not spend money they do not have.
“The fund balance that is available for appropriation is going to be your unassigned fund balance. Like the general fund, your restricted fund balance is made up of inventory required for state stabilization and all that really is is your due from other governments. They say if you don’t have that money you can’t spend it, so it is on your balance sheet, it’s a receivable, you can’t spend it, so it is automatically restricted,” said Wicker.
When separating the general fund from all other funds, it was determined that the fund balance had a decrease of $290,356 and all other funds had a decrease of $340, 117. Restricted funds were found to have increased $81,981, which Wicker reminded the board is their due from other governments.
“Your assigned is the same, and the unassigned decreased $372,337. What happened here is your revenues in FY 23, as compared to FY 22, increased $7,072 but the expenditures increased $780, 902, so that is why there is a negative change in fund balance.”
Dr. Truman interjected to remind that in 2021-2022 the school system had access to ESRA funds, or the Elementary and Secondary School Emergency Relief Fund.
“Those ESRA funds helped us to shift from local spending to ESRA spending. We don’t have ESRA funds anymore. It is going to be hard for us to replace those unassigned fund balances,” Truman said.
Wicker said one factor may be cost of living increases.
“Everything costs more today than it did a year ago and so that number is going to still keep going north,” Wicker said.
When looking at governmental revenues by source, the revenue from the state of North Carolina increased to $2,619,405 while the revenue from Anson County decreased $17,665. Wicker found revenues from the US government increased $1,200,747 and other revenues increased $796,382.
“So in total that was an increase of $4,598,869. Just to be clear, that is in total governmental revenue, not just the general funds, that is all of your governmental funds combined,” Wicker said.
Strickland Hardee PLLC also studied how Anson County’s school system revenues have been doing over the last five years, finding that when looking at total revenues, the firm found no discrepancies.
Discussing child nutrition net position, Wicker reported a decrease of $286,642 from 2022 to 2023.
“Child nutrition revenues decreased $220,391 as compared to FY 22, and expenses increased $501,339,” Wicker said.
Recalling the pandemic occurring during this time frame, Dr. Truman theorized part of the discrepancy may be a result of the school system having provided lunches for students during the nation-wide shutdown.
“Your federal reimbursement is definitely going to go down with less meals being sold or handed out. That certainly is part of it, but you know really it just boils down to the rising cost in everything,” Wicker said.
Using the increased fuel prices as an example, Wicker pointed out that to get milk to the school there is an increasingly significant fuel charge added.
“The cost of everything has gone up and the cost of revenues didn’t increase enough to keep up with that so you had a net loss in the current year,” stated Wicker.
Praising staff, Wicker concluded his presentation by saying, “We did not encounter any significant difficulties in dealing with management in completing the audit. Everybody here was very welcoming and hospitable.”