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|Parish school system finances remain strong|
The Ouachita Parish school system remains financially sound in spite of a slight decrease in net assets during the 2008 fiscal year.
During the 2008 fiscal year, the school system's net assets decreased by $17.5 million, from $134.7 million to $117.2 million, according to an audit of the school system's finances.
The main reason the school system's net assets decreased during the 2007-08 fiscal year was it was required to start accounting for other post employment benefits in its financial statements, according to the audit.
"This resulted in a liability of $20.3 million that had not been previously required to be included in the system's statements," the audit said.
"It is the liability for future payments of retirees' health care," said Richie Garrett, business manager at Ouachita Parish Schools.
"In the past it has been on a pay as you go basis and you didn't recognize it till you actually paid it," Garrett said. "Now, the Governmental Accounting Standards Board wants you to recognize it when it's earned. It's basically an accounting change."
"Every school system and every governmental agency will have to comply with this, so they all will have this huge liability popping up," Garrett added.
The accounting firm of Luffey, Huffman, Ragsdale & Soignier conducted the audit of the parish school system.
David Soignier, an accountant with the firm, said governing bodies throughout the country encountered the same problem the parish school system encountered in dealing with future payments for retiree health care benefits.
"This was the first year to implement what's called GASB 45, and unfortunately that's a $20-million hit, and that's not unusual for any other governmental agency," Soignier said. "If you look at any other government operations, they will have the same kind of impact."
"That's nothing negative on you all," Soignier said.
Soignier presented the audit report Tuesday during the Ouachita Parish School Board's regular meeting.
"You had an unqualified opinion and that's the best you all can have," Soignier continued. "So that's a big credit to (Richie) Garrett and everyone in the business affairs department.
"Overall, your total assets went up $34 million, which sounds really great, but a large part of that was $31 million, which is in investments. So that's temporary money that will come out when you all start spending money on capital projects."
The school system's general fund -- its principal operating fund -- decreased by $3.9 million, from $21.2 million to $17.2 million.
The school board wants maintain a general fund balance between 10 percent-15 percent of general fund revenue, according to Garrett. The school board has been reducing the fund balance over the past two years through one-time expenditures to fall within that range.
Garrett does not anticipate any "large or unusual expenditures" during the 2008-09 fiscal year. The biggest expenditure is expected to be for fuel and utilities. However, those two areas only represent 3 percent to 4 percent of the general fund budget, he said.
Last fiscal year, the school system spent some $168 million. Most of the expenditures were related to salaries and benefits, Soignier said.
Total revenues rose from $107 million to $124 million, a $16 million increase. Of that amount, $14 million was due to a change in the MFP funding formula by the Legislature.
Revenues also improved last fiscal year due to an increase in ad valorem taxes and sales tax collections throughout the parish.
The audit report cited the school system for two findings dealing with internal control over financial reporting.
The audit said in fiscal year 2008, the school board had two special revenue funds that exceeded its budget by 5 percent of estimated expenditures which were not amended.
The West Ouachita Sales Tax Fund had budgeted expenditures of $948,225, but had actual expenditures of $1,024,955.
The school food service fund also had budgeted expenditures of $8,553,843, but had actual expenditures of $9,234,830.
Also during the course of the audit, two errors were found in the payroll fund.
A check of $413,984 was issued for retiree health benefits in June 2008 and applied to a liability account instead of an expense account. That resulted in a $413,984 understatement of liabilities and expenses and an overstatement of fund balance.
The second error involved the posting of one of the three payrolls that are processed in June, expensed in June, but issued in July and August, according to the audit. That procedure resulted in the school system having expense accounts not properly charged for a full year's salaries in the year the expense was incurred, according to the audit.
Garrett said steps have been taken to correct the findings.