Fillmore Central board informed of growing general fund balance, improved bond rating
Auditor compliments staff, board on measures to improve district's financial stability
Thursday, December 06, 2012 2:41 AM
Jason Boynton from Smith & Schafer, Fillmore Central's auditing firm, and Patty Heminover from Springstead, presenting information on the sale of the bonds for the upcoming HVAC project, both delivered good news to the Fillmore Central Board last week during its regular November meeting.
First, Boynton reviewed the 2011-2012 audit report and complimented the staff and board members for its work toward strengthening the general fund balance. Then, Heminover told the board that the school district's credit rating had improved to an A-plus, which helped the district secure a very competitive interest rate for the sale of bonds to fund the HVAC project at the high school.
Boynton provided a quick overview of the audit for the board after spending several hours with the bookkeeping staff and Superintendent Richard Keith.
Much of the audit is based on using an average daily membership (ADM), which is calculated based on full-time and fractional enrollments. Boynton noted the district had seen a drastic drop in ADM between 2004 and 2011, going from 672 to 541. However, the district has remained more stable in the past two years, having a 542 ADM in 2012.
Boynton also added that over the past several years, state funding has been on a downward trend, with delays being made in allocations. That, too, has returned to a more "normal" level.
He pointed out that regular instruction continues to be the major cost for the district, which is as it should be.
A comparison of costs per ADM for regular instruction was shared considering schools of similar size as well as considering the state average. Boynton explained Fillmore Central's expenditures are less than other schools its size while it is only slightly higher than the state average.
"You continually do a good job keeping your expenditures in line with your enrollment," Boynton told the board. "You have even been able to generate an excess in the last few years, so have built up the general fund back to a stable level."
He complimented the staff and superintendent on their diligence as did board chairman Ross Kiehne. Kiehne thanked Superintendent Keith, Darla Ebner and Kathy Whalen for their work as well as the work of former superintendent Myrna Luehmann.
"You are doing things well here," Boynton concluded.
Following the board meeting, Keith explained, "Through a concerted effort by the school board, administration and staff, Fillmore Central Schools has moved into a stable financial position. Recent audit figures show a steady growth in the general fund balance."
For several years the general fund balance was less than adequate for fiscal security. In the past five years it has grown from less than $200,000 to over $2,000,000.
"Several factors have contributed to the turnaround," Keith said. "OPEB bonds issued in 2008 have saved the general fund over $100,000 annually. Improvements and upgrades to the elementary building HVAC system have saved the district in maintenance and operating costs. Staffing changes and adjustments during times of declining enrollments has helped us operate within our budget."
Building a stable, healthy general fund balance has proven to be good for taxpayers as well, Keith continued.
Heminover presented information regarding the sale of bonds for the upcoming HVAC project at the high school, which is slated to begin this spring.
Bids for the sale of bonds, in the amount of $965,000, were solicited on Tuesday and Heminover reported Springsted had secured a successful sale.
"It was a really good time to go out on the market," she said. "We had two strong bidders."
While Springsted had projected an interest rate of 1.83 percent, the winning bidder, United Bankers' Bank came in with an actual bid of 1.74 percent.
"The really good news is that your district received an upgrade on your credit rating," Heminover added. "This is really good, especially considering this economy."
The district increased its rating from an A to an A-plus. This rating is not only based on current financial status, but also the district's leadership, policies, positive outlook and fund balance. "It's especially important that all of these things were very strong and having a stable fund balance is important because there is little stability at the state level," she added. "You are saving taxpayers a great deal of money because of that credit rating."
Heminover said the sale of bonds will be held on Dec. 27.
"I just want to add this is the lowest interest rate the district has ever had," she continued. "The last HVAC project we did was at 4 percent and it was 2.22 percent when we refunded the bonds in 2010."
Following her recommendation, the board awarded the bond sale in the amount of $965,000 to United Banker's Bank for a 1.74 percent interest rate.
"While the growth and apparent stability of the general fund is reason for celebration, we know there is still a need to be diligent in our efforts to maintain an appropriate reserve and remain fiscally viable," Keith pointed out after the meeting. "Changes in resources and expenditures that often occur without district control could quickly put us back into a less than favorable financial situation."