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Auditors have given Paris Independent School District a clean bill of fiscal health.
Johnna McNeal, a certified public accountant with Malory, McNeal and Co., delivered a report to the school board Monday that gave PISD an “unmodified” opinion on its financial statements, government auditing standards and major programs.
The previous term was an “unqualified” opinion, but governmental accounting standards changed the terminology for clarity, McNeal said.
“Good news for you – we clarified things for you,” she said. “What we used to say in three pages we now say in five pages, but it’s clarified.”
Trustee Jenny Wilson asked if PISD’s “financial health” is on an upswing or down.
“I think it’s increasing because your foundation is increasing, your fund balance is increasing,” McNeal replied. “The district is on better footing right now than it was, say, five years ago.”
The district spent $522,767 more than the $37.11 million that taxes and other government revenue brought in, but still managed to end the year with an $8.3 million fund balance, $1.03 million more than the previous year. In the past, that fund balance has been much lower.
“Your fund balance is working itself back up to something to where TEA would be more comfortable with,” McNeal said. “We would like to see another $1 million.”
Part of that is because Paris ISD operates several federally funded programs where the federal government reimburses PISD after the money is spent. The district needs to have enough funds on hand to run for a while to make up for that lag time or to take care of itself if something happens to delay tax collections.
“And sometimes the government shuts down,” Superintendent Paul Jones added.
Of the district’s revenue, 47 percent comes from state programs, 27 percent from local taxes and 25 percent from federal funds.
For debt service, known as the interest and sinking fund, PISD collected $3.35 million from taxes and state funds and paid $4.03 million. The plan was to use the $639,000 in the I&S fund balance to cushion the debt tax rate. PISD has $54.7 million in debt.
An audit looks at a sampling of the district’s finances, not every single payment made. The auditors work with Business Manager Tish Holleman to pull everything together.
“We do not check all the transactions,” McNeal said. “I know she feels like we are here forever, but if we did look at everything, we really would be.”
The auditor’s job is to look for things that “could turn around and bite you at some time” in the district’s financial statements. One area that gets special attention is state payments that are based on student enrollment. Districts budget based on how many students they expect to have. If the state overpays, the school district has to repay the difference.
“That is one of the areas of an audit that is considered very high-risk,” McNeal said. “Tish calculates the number. We calculate it without looking at Tish’s numbers, and then we sit down and argue out any differences.”
PISD is a “low-risk” district, so the amount of work that goes into examining its federal funding is less than a high-risk district. The sampling is 25 percent instead of 50 percent, and any federal programs over $300,000 only have to be checked every three years. Which programs must be checked vary from year to year. This year included Title I and preschool programs.
Based on the sampling, Paris ISD looks good in that area, as well, McNeal said. However, the audit report points out that the audit does not measure legal compliance, just a “reasonable basis for our opinion on compliance for each major federal program.”
PISD’s finances were solid enough for the district to earn a superior rating from the Financial Integrity Rating System of Texas for the 2011-2012 fiscal year.
The district scored 64 out of a possible 70 points. PISD slipped some in a few areas. One is a question of whether debt payments come to less than $350 per student. Paris’ debt payments come to about $705 per student. The district scored better on the last FIRST report because PISD had just changed its fiscal year to end in June, which halved the debt payments in the report, Holleman said.
PISD also lost a point due to its student-to-teacher ratio. Based on the district’s size, the state would like to see a ratio of 11.5, and PISD’s ratio is 11.4594.
A similar ratio measuring the number of students to district staff dropped the score a bit further. The state was looking for a ratio of 6.3, where PISD has 5.98 students for each person on staff. The district has actually cut positions, but the student population decreased faster, Holleman said.
The FIRST score will eventually be tied into the district’s accountability rating, Holleman said, but there are some areas the district cannot do much about.
“The ones we can control, we need to be all over,” she said. “Our lives don’t need to be about the FIRST ratings.”