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Audit shows both good and bad for Perham-Dent school district

Audit results for the Perham-Dent Public School District's 2009-2010 year brought both good and unsettling news.

The audit was presented at the regular school board meeting on Dec. 15.

Highlights included an increased unreserved general fund balance, which went up $886,547. The reserved balance increased by $581,666, and the food service fund balance increased by $114,582.

While that was good news, not all that money will be there next year.

Roy Lunde of Brady, Martz and Associates, pointed out that last year the state took 7 percent of the general aid to Minnesota schools and substituted funding with federal stimulus dollars that will expire next year.

About 83 percent of the district's funding comes from the state. With federal dollars ending and best case scenario, no more funding for each student, plus declining enrollment and no levy referendum monies, the board is remaining cautious on spending.

"We all know what's happing with the state of Minnesota's budget... it's terrible," Lunde said. "Funding will probably go down. You can cut costs, but you cut substantially in the last year. Or you can have an operating levy. An operating levy is vital to your school district."

Superintendent Tamara Uselman asked if the state has the resources to fill the holes left when the federal stimulus dollars expire.

Lunde replied he believed it would.

"The schools would be devastated with that type of loss," he said.

However, changes at the state level still mean the district will be impacted.

"The state is making some significant changes to the way that they pay you and that has a big impact on your district because you're not in strong enough financial situation without having to borrow money," Lunde said.

Despite unknown variables in future funding for the district, Lunde said the Perham-Dent school district had "a good year financially."

The financial analysis for the district as a whole showed that the combined net assets were $8.69 million on June 30, 2010. This was an increase of 17.3 percent from the prior year, according to the audit report.

The somewhat daunting page of the audit report was titled "factors bearing on the district's future."

These included familiar concerns such as declining enrollment, no increased aid from the state and inflation.

"Declining enrollment coupled with inflation will undoubtedly have a negative impact on the district's financial outlook," the report states.

Some talk came up after a suggested general fund unreserved balance of 25 percent of revenue, or $2.2 million for the district was brought up by the auditor. The current balance is $1.4 million, Business Manager Kristi Werner said, which also reflects one-time monies.

Board member David Schornack said he was surprised at that number and said he was worried about the credibility of the board when the public hears that number.

"It's difficult for the public to understand the increase in fund balance," he said. "The general public looks at the bottom number."

Board member Mike Hamann said in these uncertain times, it's vital to sit money aside.

"We don't know what the government will do," he said.

Werner mentioned that Perham's unreserved balance is lower than other area districts. The auditor recommended a fund balance of almost double what Perham currently has.

Uselman said those monies will also help future projects such as costly heating system and roof repairs.