SPECIAL MEETING OF THE GARRETT COUNTY BOARD OF EDUCATION
Oakland, Maryland 21550
Tuesday, September 25, 2012
Part I - Call to Order
Mrs. Charlotte Sebold, President, called the monthly meeting of the Board of Education to order at 5:31 p.m. Also in attendance were Mrs. Cynthia Downton, Vice President; Mr. Thomas Carr, Dr. Donald Forrester, Mr. Rodney Reckart, associate members; and Dr. Janet Wilson, Superintendent of Schools. The meeting was held at central office.
Part II - Executive Session
Upon a motion by Dr. Forrester, seconded by Mr. Reckart, the Board of Education unanimously agreed to move to executive session at 5:32 p.m. in accordance with Public Law 4-1-6 and Section 10-508 of the State Government Code for the purpose of discussing personnel matters affecting one or more individuals and administrative function.
Mrs. Barbara Baker, Assistant Superintendent; Mr. Keith Harvey, Director of Human Resources; Mr. Larry McKenzie, Director of Finance; were present during all or part of the Executive Session.
Part III – Reopening of Public Session
The Board reconvened in public session at 6:15 p.m.
Part IV – New Business
Mr. James Murray, CPA, of Rodeheaver & Associates, P.C., presented the financial audit for the period ending June 30, 2012. He was assisted by Mr. Daniel Porter, CPA, Manager of the Board of Education audit, and Ms. Holli Owens, staff accountant, who was the field manager on the engagement.
Mr. Murray reviewed a letter to the Board of Education dated September 25, 2012. He explained that professional standards require that this information be provided addressing their responsibility under generally accepted auditing standards, Government Auditing Standards and OMB Circular A-133, as well as certain information related to the planned scope and timing of the audit. This letter detailed the significant audit findings. Under Qualitative Aspects of Accounting Practices, it stated that the Board of Education did not adopt any new accounting policies and that the application of existing policies was not changed during 2012. It also noted that no transactions were entered into by the Board during the year for which there was a lack of authoritative guidance or consensus and that all significant transactions have been recognized in the financial statements in the proper periods. Mr. Murray reported that the most sensitive estimate affecting the financial statements was management’s estimate of the net OPEB (Other Post-Employment Benefits) obligation, which is based on an actuarial valuation of the liability. He also reported that there were no significant difficulties in dealing with management in performing and completing the audit. And, all audit adjustments, reclassifications and eliminations necessary for financial reporting purposes have been agreed on by management. He also informed the Board that there were no disagreements with management during the course of the audit and that Rodeheaver & Associates is not aware of the Board consulting with any other accountants in regards to the audit. Mr. Murray stated the report expressed an unqualified opinion on the financial statements.
Mr. Murray reviewed the Statement of Net Assets. He reported that total assets of the Garrett County Board of Education are $61,657,973; the total liabilities are $15,120,958; resulting in a total net assets of $46,537,015. He pointed out that there is a deficiency of unrestricted assets due to the Other Post-Employment Benefits (OPEB). Mr. Murray continued and reviewed the Statement of Activities. He explained that this statement reflects the net cost of education. The next report reviewed was the balance sheet which includes the current expense fund, the food service fund, and the school construction fund. The current expense fund has total assets of $11,389,327. The current expense fund has total liabilities of $7,266,770, and a total fund balance of $4,122,557. The increase over the prior year’s balance is made up primarily of $2,665,176 which relates to the Johnson Control Energy Performance Contract. The food service fund has total assets of $563,704. The food service fund has total liabilities of $241,127, and a total fund balance of $322,577. The school construction fund has total assets of $0; total liabilities of $0; and a total fund balance of $0.
Mr. Murray reviewed the Statement of Revenues, Expenditures, and Changes in Fund Balances for Governmental Funds. He noted that American Recovery and Reinvestment Act (ARRA) funds were mostly exhausted in 2011 resulting in a substantial decrease in financial assistance. He pointed out that the 1.7 million dollars from the County helped to cover that loss.
Mr. Murray reviewed the Current Expense Fund – Unrestricted Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual (Budgetary Basis). He pointed out a surplus in the amount of $573,061.
Mr. Murray reviewed the Food Service Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budge and Actual (Budgetary Basis). The food service fund ended with a surplus of $27,097. He pointed out several issues that are affecting al carte revenue which has been supporting the food service budget in the past.
Mr. Murray reviewed the Statement of Fiduciary Net Assets. The total assets of the school activities funds as of June 30, 2012 were $514,943.
Mr. Murray informed the Board that Notes to the Financial Statements can be found on pages 23-41 of the Financial Report. He pointed out that 19 employees took advantage of an early retirement program. He also pointed out to the Board members where information can be found on the Johnson Controls Energy Efficiency Program. He detailed the notes in regards to the OPEB obligation stating that the increase in the OPEB obligation for FY 12 was $890,395.
Mr. Murray noted the Management’s Discussion and Analysis was prepared by Mr. McKenzie prior to reviewing its content with the Board. He reviewed the Management’s Discussion and Analysis notes in regards to Factors Impacting the School System. He pointed out two factors negatively impacting future revenue as the county’s wealth potential and declining enrollment. Mr. Murray asked the Board to also keep in mind the pension transition from the state to the county as another future factor to consider.
Mr. Porter reviewed the Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. The report is a result of control testing. He stated that the biggest risk from the standpoint of the Board is the student activities fund. He pointed out that administration has put in controls in order to prevent any problems from occurring by requiring extensive reconciliation.
Mr. Porter explained that controls are tested to see if they are designed, implemented, and, if in the current year, applied consistently. The only material weakness to report is that the Board has inadequate design of internal control over the preparation of its financial statements. Board personnel lack the qualifications and training necessary to prepare financial statements in accordance with General Accepted Accounting Principals (GAAP). The Board does not have controls in place over the selection and application of accounting principles that are in conformity with GAAP including sufficient expertise in selecting and applying accounting principles as an aspect of such controls. The Board has determined it is in their best interest due to costs to outsource the preparation of the financial statements to their independent auditors.
Mr. Porter reviewed the Single Audit Report. He reported that as a result of testing the major federal programs selected for audit, there were no instances of non-compliance found. Mr. Porter also indicated that there were not any deficiencies in internal control over compliance and that in the opinion of the auditors, the schedule of federal expenditures was fairly stated in all material respects in relation to the basic financial statement.
Mr. Murray expressed his appreciation of the finance team. The Board thanked Mr. Murray and his team for the audit services. Mr. McKenzie also expressed his appreciation to Mr. Murray and his team. Mrs. Sebold thanked Mr. Murray for the in depth explanation which helps the Board to have a better understanding of the information provided in the audit. Mr. McKenzie also expressed his appreciation for the food service department as well as the finance department for their hard work over the past year.
Mr. Jim Thomas, Director of Facilities and Maintenance, gave an update on the Capital Improvement Plan (CIP). He informed the Board that a revision has been made to the CIP in regards to the Southern Middle School renovation which was originally approved at the September 11, 2012 meeting. He explained that due to low student enrollment, square footage, and age of building, the state funding will be less than projected. The renovation will cover 77,000 square feet as opposed to 92,000 square feet. Dr. Wilson informed the Board that the County Commissioners have agreed to pay for the square footage not allowed in the state formula.
Mr. Thomas informed the board that an Energy Efficiency Initiative Program (EEIP) is part of the 2014 CIP submission. Mr. Thomas reported that he will calculate the numbers to be reflected on the CIP adding that calculations to relamp all elementary schools as part of this program will be submitted with the plan. Mr. Thomas informed the Board that the CIP will be brought back again with changes in regards to the energy efficiency initiative program. The final due date is November 28, 2012. Upon a motion by Dr. Forrester, seconded by Mr. Reckart, the Board of Education unanimously approved the revisions to the Capital Improvement Plan.
Mr. Reckart expressed his appreciation for Mr. Thomas and stated that the energy efficiency steps being taken will pay off in years to come.
Dr. Wilson thanked Mr. Thomas for familiarizing her with all the facilities. She added that Mr. Thomas has an excellent relationship with his crew and he is going to be missed.
Part V – Personnel Recommendations
Dr. Wilson recommended approval of the following personnel matters:
Appointments: William Swift, Director of Facilities, Maintenance and Operations, CO, eff. 10/08/12
Retirement: Douglas M. Lyons, Teacher, SH, eff. 10/1/12
Upon a motion by Mr. Carr and a second by Mrs. Downton, the Board of Education unanimously approved the superintendent’s recommendations.
Part III – Adjournment
There being no further business, the meeting was adjourned at 7:41 p.m.
|Mrs. Charlotte Sebold||Dr. Janet S. Wilson|
|Approved: November 13, 2012|