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Cloquet district financials in good shape


November 1, 2019

As a result of making close to $600,000 in cuts this past year and better than expected state aid, the Cloquet school board got some good news Monday following its annual audit. Instead of ending the 2018 fiscal year $800,000 in the hole, the district instead had an overage of $450 in its general fund.

Including restricted funds such as transportation and facilities maintenance, however, the district actually ended the year with a $448,617 increase to its fund balance. Most of the increase was in the long-term facilities maintenance fund, said district finance director Candace Nelis.

“Utilities, fuel costs, staff changes — who will retire, who will replace them, where they fall on the wage scale or insurance — those are all pretty difficult to predict,” Nelis said. “All those little variables add up when you have hundreds of employees and thousands of kids.”

Superintendent Michael Cary explained that the district is conservative with its revenue estimates, while it tends to overestimate expenses somewhat. He compared it to budgeting for a household, noting that most expenses can be estimated in advance, but not known exactly.

The new auditing firm hired by the district, Bergan KDV, issued an “unmodified opinion,” which is the best opinion an auditor is able to offer, explained CPA Jackie Knowles, who walked the board through an overview of its findings.

Knowles said the district has about three months of expenditures in reserve, which is in line with the state’s maximum recommendations. She also said the amount the district gets in revenue from property taxes divided by the number of students is lower than the state average.

“So, education in Cloquet is a bargain,” said chairman Ted Lammi, repeating a favored phrase. Knowles concurred that property taxes for the school district are lower than the state average in Cloquet.

The auditing firm did make some corrections and suggestions, Knowles said, after they found two internal control issues. The first was amounts related to capital assets that were incorrect because of previous misstatements, from work done in 2016-18 that wasn’t recorded and the sale of the old middle school. Everything is corrected for 2019, she said, and management determined the errors did not significantly affect the district’s financial statements as a whole.

The auditing firm noted a lack of segregation of accounting duties due to a limited number of office employees, with a given individual being responsible for more than one aspect of an accounting transaction. While complete segregation of accounting duties is recommended, the cost for the number of staff to achieve that is “impractical,” the report said. Instead, the firm suggested the board continue to monitor and be aware of potential problems.

Cary praised Nelis for keeping revenues and spending in line, and pointed out that the increase in long-term facilities maintenance funds will go toward projects to maintain district facilities to maximize the life of the buildings.

The school district is holding a strategic planning session Monday, Nov. 4. The session starts at 6 p.m. in the Cloquet High School cafeteria.


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