Audit report gives school district two thumbs up

MAT-SU -- An independent audit of the 2002-2003 Matanuska-Susitna Borough School District financial state says that the district has complied with state and federal regulations and that the financial statements created by the district accurately show the money paper trail for FY 2003.

"There is nothing to report, no non-compliance, no questionable costs," said Michelle Drew, an auditor for Mikunda, Cottrell & Company, which performed the audit. "[The district] has received an unqualified opinion, which is the highest you can receive."

Drew presented the independent audit report to the Mat-Su Borough School Board on Jan. 7, applauding the district on the accuracy of their financial state, and then warning the district of potential financial problems in the upcoming year.

An upcoming cost of $3 million to pay for increases in the state's Public Employee Retirement System and Teachers Retirement System for FY05 is foreseen as a potential problem for the district, as is the lack of an adequate fund balance -- reserves for the district for years that expenditures exceed revenue. Neither of these problems are new to the district or school board's ears; the district itself pointed to these problems in its Management's Discussion and Analysis report it gave to the auditors. The Financial Advisory Committee and the recently released arbitrator's report for negotiations between the district and Matanuska-Susitna Education Association also points to these issues.

Jack Sherman is the assistant superintendent of Business and Risk Management for the district, he said concerns about PERS/TRS and the fund balance are warranted; in fact, the FY03 report shows that if it had not been for a fund balance from FY02, the district would have not been able to cover its expenditures for the 2002-2003 school year.

"Last year (2003) was the first year that our expenditures exceeded revenue," Sherman said. "If it hadn't have been for our fund balance … you just can't go in the red."

For 2003, the district's revenue was $101,572,573; the expenditures were $102,496,424. The district had to use $407,132 in order to balance the budget, leaving $89,268 in the fund balance. At the end of each year, half of the fund balance lapses back to the Mat-Su Borough Assembly, leaving $446,434 available for the 2004 budget.