The Park Rapids School Board received an unmodified or “clean” opinion Monday in an audit report of the district’s finances for the fiscal year ending June 30, 2021.

Mary Reedy, CPA with CliftonLarsonAllen LLP, reported that the audit went smoothly, although the district’s inventory was overstated by approximately $6,000 due to the timing of the inventory count and year-end reconciliation.

She cited the usual material weaknesses regarding internal controls: segregation of duties among the district’s small accounting staff and the fact that the auditing firm drafts the district’s financial statements, a condition the firm sees “all day, every day,” she said.

Reedy said the Child Nutrition Cluster and Coronavirus Relief funds were selected for this year’s single audit of federally funded programs. She said the district spent a total of about $2.6 million of federal awards during fiscal 2021, including about $632,000 of the Coronavirus Relief funds; the previous year’s total was about $2 million.

Mary Reedy with the auditing firm CliftonLarsonAllen LLP told the Park Rapids School Board on Monday, Nov. 1, 2021 that the district's decline in enrollment during 2020-21 was experienced by many other school districts, impacting their revenues through state funding formulas.
Contributed / Park Rapids Area Schools
Mary Reedy with the auditing firm CliftonLarsonAllen LLP told the Park Rapids School Board on Monday, Nov. 1, 2021 that the district's decline in enrollment during 2020-21 was experienced by many other school districts, impacting their revenues through state funding formulas. Contributed / Park Rapids Area Schools

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The district’s weighted average daily membership for fiscal 2021 decreased slightly from 2020, Reedy said, from 1,785 to 1,749. This measure of enrollment is a factor in determining the district’s state revenue, although the increase in Federal dollars helped. Reedy said quite a few other school districts also lost enrollment last year.

As a result, she said, the district’s total revenues for the year were about $296,000 below budget, while expenditures went about $149,000 over budget, with both totaling over $21 million. However, the district also offset this budget deficit with more than $286,000 in capital lease proceeds.

The district saw its total fund balances increase by about $9,000, though it budgeted for an increase of $455,000. Based on unassigned fund balances, Reedy said, the district could operate for about three months with no income.

Auditor Mary Reedy shared this breakdown of different types of fund balances from 2017 to 2021 with the Park Rapids School Board on Nov. 1, 2021. Restricted funds include more than $2.3 million for long-term facility maintenance. Committed funds include severance and retirement benefits. Assigned funds include money earmarked for equipment and technology purchases, an HVAC update and the school forest.
Contributed / Park Rapids Area Schools
Auditor Mary Reedy shared this breakdown of different types of fund balances from 2017 to 2021 with the Park Rapids School Board on Nov. 1, 2021. Restricted funds include more than $2.3 million for long-term facility maintenance. Committed funds include severance and retirement benefits. Assigned funds include money earmarked for equipment and technology purchases, an HVAC update and the school forest. Contributed / Park Rapids Area Schools

Restricted fund balances increased from $4 million to $4.8 million during the fiscal year. Reedy said the biggest increases were in long-term facility maintenance funds and scholarship funds.

Food service revenues were about $103,000 over budget, Reedy said, due to a unique situation where the program was fully funded by federal dollars. Expenditures were about $21,000 over budget.

The food service fund saw a net loss of $58,000, she said. However, the program budgeted for a loss of $140,000. Reedy explained that the program is not supposed to make money, so it tries to spend down its fund balance.

The community service fund’s revenues were about $83,000 over budget and expenditures were about $29,000 over budget, she said. The program budgeted for a net loss of $91,000, but the fund actually saw a loss of $37,000. Nevertheless, the restricted funds for each of the district’s community service programs ended the year with a positive balance.

Reedy said the district’s debt service fund is operating as it should, clearing more in revenues that it expended for the second year in a row.

Auditor Mary Reedy told the Park Rapids School Board on Nov. 1, 2021 that the district's debt service fund continues to operate as it should.
Contributed / Park Rapids Area Schools
Auditor Mary Reedy told the Park Rapids School Board on Nov. 1, 2021 that the district's debt service fund continues to operate as it should. Contributed / Park Rapids Area Schools

Compared to the statewide average and districts of similar size, Reedy reported that the Park Rapids Schools have spent less per student on administration and district support during the previous four fiscal years. Meanwhile, the district spent more per student on instruction than the average for similar-sized districts but slightly less than the statewide average.

“So, those dollars are going into the classroom,” said school board chair Sherry Safratowich, and Reedy confirmed her interpretation.

School board member Stephanie Carlson made a motion to accept the audit report, and the motion passed unanimously.

According to a fiscal year 2021 audit, the Park Rapids Area Schools spent less per student on administration and district support than the statewide average and other school districts in the same size range during the previous four fiscal years. These cost areas included the school board, superintendent, principals, business office, building and grounds, legal and data processing services.
Contributed / Park Rapids Area Schools, Nov. 2, 2021
According to a fiscal year 2021 audit, the Park Rapids Area Schools spent less per student on administration and district support than the statewide average and other school districts in the same size range during the previous four fiscal years. These cost areas included the school board, superintendent, principals, business office, building and grounds, legal and data processing services. Contributed / Park Rapids Area Schools, Nov. 2, 2021