School District Gets Good Report on Spending in Audit

Ever since the San Bruno Park School District began talks about school closures last year—and even before then—a number of residents have criticized school officials about the district's spending.

Claiming mismanagement and secrecy, many wanted to see the district's audit to find out just how administrators were spending taxpayer money.

A 2011 audit (see attached), which is posted on the district's website and is the most recent report on the district's finances, provides that glimpse.

In all, the audit, performed by Crowe Horwath, concludes that the district has "an excellent track record in meeting the fiscal challenges in what has proven to be a cycle of lean years and prosperous years for education finances."

Here are some highlights:

• During the 2010-11 school year, the district had a $5 million decrease in total net assets, which was mostly attributable to decreases in property taxes and federal and state aid. The other contributor? Higher costs in plant and ancillary services due to the increase in deferred maintenance and capital facility improvement work throughout the district.
• The district's total longterm debt decreased by $154,791 from 2010 to 2011 because of payments made on general obligation bonds.
• Seventy percent, or $19.6 million of district's budget, gets spent on educating and caring for students. Administrative costs account for only 5 percent of the district's total costs.
• The auditor lauded the district for being diligent about reducing expenditures and addressing deficit spending, despite the fact that revenues ($22.9 million, a $2.6 million decrease compared to the 2009-10 school year) came in lower than projected: "The District’s actual General Fund expenditures totaled $1,551,221 less than the final budget projections," the audit said. "These lower than expected expenditures were primarily in Capital Outlay and Books and Supplies."
• The district’s actual deficit at the end of 2011 was $1.3 million less than projected in the final budget. The reduced deficit amount was due to the various cost control measures taken throughout the year, which meant actual expenses came in lower than the final projections.
• The auditor also lauded the district for taking "significant" measures to address its deficit spending pattern by implementing utility reduction plans, maintaining a strong reserve fund, seeking other revenue sources and using proceeds from the the sale of the Carl Sandburg site to take care of one-time general fund expenses. In August 2010, the state Allocation Board approved a proposal by the district to use $12.2 million from that fund over several years to take care of non-capital improvement expenses, including paying for retirement benefits and a special education study, in order to reduce San Bruno Park’s ongoing deficit spending.

Not everything in the audit was a clean bill of health.

The auditor noted that the district other post-employment benefits plan, which takes care of the health benefits of certain employees, had not been funded as of September 2010. Through its request from the state to use a portion of the proceeds from the Carl Sandburg site, the district eventually placed $3 million in an irrevocable trust fund to help with those payments.

The auditor also criticized the district for underreporting a purchase order made for $1.3 million. That purchase order was related to the installation of the district's new solar panels.

If you see anything else worth noting in the audit, feel free to share your observations with the community.