The Pike County Schools Board of Education received positive news regarding the district’s finances after receiving its audit report during a special meeting on Thursday.

The district’s 2018-19 audit report was presented to the board during the meeting  by Don Wallen, of Wallen, Puckett & Anderson, PSC, an accounting firm in Pikeville. Wallen told board members that he did not have any recommendations for the district based on the report.

Additionally, Wallen later discussed some sparse, minor inconsistencies that were discovered while examining some of the district’s schools’ activity funds.

“In this case, I don’t have much critical to say at this point, so I’ll keep it short,” Wallen said at the start of his presentation. “Our report, first of all, is a clean report. It’s an unqualified report, which means we found no problems.”

The audit covered from July 1, 2018, to June 30, 2019. The report showed that the district saved more than $2 million in expenses over the 2018-19 fiscal year, leaving more than $3 million in general fund surplus revenue.

According to the report, the district’s general fund surplus revenue increased from about $3.3 million at the beginning of the fiscal year to nearly $5.4 million by June 30, 2019, increasing by nearly $2.1 million.

“I can’t tell you exactly what created all of that, but I can tell you that you did have a spike in collecting old property taxes,” Wallen said. “I’ll warn you that that may not happen again. We don’t know how the state of Kentucky will finance us. Property taxes may be down this next year, and, of course, the economy and maybe a loss of students is directly going to affect us.”

The district’s total general fund revenue totaled about $79.1 million, and its expenses totaled $77.89 million. The district’s expenses primarily consisted of salary and benefits. According to the report, other expenses included utilities, insurances, new vehicles and buses, instructional supplies, maintenance supplies and general supplies, among others.

The district saw an increase in its net position for governmental activities, resulting in a net position of about $2.86 million, which, Wallen said, is a positive financial sign for the district’s board.

“The primary focus for a Board of Education or, really, any governmental type agency anymore is your net position,” Wallen said. “The net position is simply your total assets subtracted by your total liabilities. When we do that for this board, we ended up the year with an increase in our net position of $969,000. Our total assets are such that we can absorb a total (pension) liability of $60 million and still show a $2 million net position.”

The report attributed the increase in general fund surplus to a 13 percent increase in property tax collection, the indirect cost of School Food Service payments and “major district initiatives to decrease overall expenditures.”

“There are things that you need to watch out for, and everything’s not always rosy,” Wallen said. “It had to be a difficult year. I know those numbers sound pretty high, but that money can disappear in a heartbeat, as you guys all know.”

Additionally, Wallen discussed some sparse, minor inconsistencies that he found while examining the activity funds at eight of the district’s schools. The Kentucky Board of Education, he said, requires all inconsistencies to be reported, regardless of their irregularities.

Some examples he listed include two cases where some expenditures did not have a provided purchase order, two cases with voided checks that could not be located and four cases where a standard invoice could not be located. At three schools, he said, there were accounts payable that were not provided in the school’s yearly report, which is submitted to the district’s finance department.

Wallen said the inconsistencies he reported were “nothing to be concerned about,” attributing them to human error. Wallen said that he only wanted to discuss them during the audit presentation in order to bring them to the board’s attention.

“It could be just one instance of human error,” Wallen said. “We still have to report it. Human error happens. Of all the schools we looked at, we only found eight where we found a problem at, and it’s nothing really repetitive.”

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