All is well financially at the Visalia Unified School District, though there were a pair of very minor problems uncovered during the district’s annual audit, and maybe an error in protocol.
Reporting Error
According to Charles Raibley–an accountant and senior manager at the accounting firm Crowe LLP who performed the district’s annual audit–the district made a “misstatement” in the way it reported a small portion of its payroll to the state.
“This misstatement you see here is related to the Internal Service Fund, or your self-insurance fund. Technically, a portion of the net pension liability for PERS (CalPERS, the state’s Public Employee Retirement System) should be allocated to that fund in your governmental fund accounting, in your unaudited actuals,” Raibley said. “However, it’s not been allocated out in the ‘unauditeds.’”
Which boils down to: The district reported the right amount, but in the wrong place. The error had no effect on the district, or, as Raibley put it:
“The net effect is zero when you look at the audit report, as a combined entity. So, when we look at the overall financial statements of the district, there’s not a finding,” he said. “It’s just looking at when you look at the self-insurance fund as a stand-alone.”
Problem with VUSD’s Report Card
There was, however, a “finding” in the district’s data reporting to the state, the audit discovered.
The district’s annual audit does three things, according to Raibley, “expressing opinions” on the accuracy of the district’s financial reporting, on whether the district met its state data reporting requirements, and, finally, on whether federal data reporting requirements were met.
For its federal reporting and for its financial statements the VUSD got “unmodified” or “clean” opinions, but Raibley’s opinion on the district’s state data reporting compliance was “qualified,” meaning errors were uncovered. The discrepancies had to do with information the VUSD gave the state for its annual School Accountability Report Card (SARC).
“When we looked to the supporting documentation for a couple of the schools of the SARCs there were some differences between the underlying data and what was in the SARC,” Raibley said.
Even Small Errors Must Be Reported
To compile the SARC–an annual evaluation of school performance–data on individual schools within the district must be reported to the state Department of Education, and some of the data VUSD reported last year doesn’t match the original numbers.
While the “very small differences” discovered in the SARC reporting don’t affect the district financially, they must be reported to the state.
“When we looked to the supporting documentation for a couple of the schools of the SARCs there were some differences between the underlying data and what was in the SARC,” Raibley said. “Unfortunately, the state doesn’t give us a materiality threshold when it comes to findings like this. We just have to report it out.”
The Board of Trustees voted unanimously to accept the audit report on March 23. The audit had to be submitted to the state no later than March 31.
Measure A Audit SNAFU
The same night VUSD’s trustees accepted the annual audit report, they also heard a similar report on finances surrounding the bonds authorized by voters in 2018 under Measure A.
While voters originally approved sale of $105 million in bonds, only $35.17 million have been issued so far, a decision prompted by the decision not to construct a fifth high school campus. Then, with the onset of COVID-19, construction projects throughout the district came to a standstill, and the district spent only about $1 million of the funds it raised through bond sales in 2020. The audit tested about half of that spending.
“Good results so far for this year (for) Measure A,” Raibley said.
However, there was a problem with how the audit results were distributed, according to Nick Macias, chair of the district’s Measure A Bond Oversight Committee (BOC), who says the committee should have gotten the results on March 2, the day the trustees received them.
“Technically, that didn’t happen,” Macias said.
Review Process Reviewed
The committee members were only given access to the audit results on March 22, meaning the BOC had no time to review them prior to trustees approving them.
“So, what would have happened if there’d been a finding?” Macias asked. “As your (BOC) chair, I’m concerned, because technically we should be looking at this as a committee, yet we didn’t have an opportunity.”
While Macias wondered if certification of the audit results should wait until after review by the BOC, the trustees voted to accept it while expressing a desire the approval process be reviewed and reworked if necessary.
“Going forward, maybe we should be a little more diligent in how we’re presenting, if Mr. Macias is correct,” said Trustee John Crabtree.
Board President Juan Guarrero echoed that sentiment.
“I also would like us to review those procedures, that we try to make sure the Bond Oversight Committee does review the document before it comes to the board,” he said.
Trustees Approve Layoffs
What wasn’t reviewed in open session was a quick decision to eliminate several classified service jobs.
Because of “reduction, modification or elimination,” the VUSD is doing away with eight positions and reducing a ninth. Gone are a handful of jobs, including office assistants and instructional aides. The director of student services position will see a reduction in hours.
The decision was needed in March to allow the district to provide those affected by the move a required 60-day notice. The change will result in savings of more than $300,000 to the district.