HUNTINGTON – Gateway Regional School District’s new auditor Patrice Squillante of Melanson Heath of Greenfield gave an abbreviated report to the School Committee on Wednesday of the recently completed 50-page FY16 audit.
Gateway Regional auditor Patrice Squillante gave an overview of the FY16 audit to the School Committee on Wednesday. (Photo by Amy Porter)
Squillante, who took over for long-time Gateway auditor Stan Kulas, said at her firm she has audited 200 cities, towns and school districts. She started with an explanation of the government-wide balance sheet, which must show long-term assets and liabilities. She said Gateway, as in all of the other audits she has done, has a net deficit of $11 million, largely due to Gateway’s share of OPEB (Other Post Employee Benefits) and pension liabilities. Specifically, the balance sheet shows a net OPEB obligation of $6.3 million and a pension liability of $5.8 million.
Squillante also asked and answered the question as to what effect this liability will have on the district. “There really isn’t any effect,” she said. She said rate setting agencies and the Department of Revenue aren’t looking at it. She said the liability is included to get municipalities and school districts to look at it.
Squillante also said that Bond ratings are more interested in whether or not districts have set up an OPEB Liability Trust Fund, whether or not there is any money in it, although any kind of reserve is a plus. The School Committee voted to establish an OPEB trust fund two years ago, and transferred $106,000 from surpluses in health insurance that year into the fund.
Business manager Stephanie Fisk said that in a state review, officials were quite impressed with the amount of discussion by the School Committee of the OPEB liability, as shown in the minutes.
The district-wide balance sheet, which Squillante said is the one viewed monthly by the School Committee, showed an undesignated E&D (excess & deficiency) fund balance of $681,000, which she said is 4% of the district budget, right around the 5% limit. She said this was a healthy place for the school district to be in, another positive indicator along with the trust fund.
The audit also showed a deficit in revenue in FY16 of $74,000 in the $16.3 million budget. Squillante said most of the deficit was due to Worthington’s unpaid contributions to the district. (At a public hearing on the FY18 budget in February, Gateway superintendent Dr. David B. Hopson said that the $80,000 that has been billed annually to Worthington for its share of OPEB costs since the town left the district in 2015 hasn’t been paid, so while they will continue to be billed, that amount has not been put in the budget for FY18.)
Administrative assistant Stacy Stewart, School Committee chair Michele Crane and Gateway superintendent Dr. David B. Hopson at meeting on Wednesday. (Photo by Amy Porter)
The deficit in revenue in FY16 was offset by $528,000 that the district didn’t spend. Squillante said most of the savings were in electricity upgrades, special education transportation and fewer students than expected opting for school choice.
However, the district also used $400,000 from its E&D account in FY16 to offset rising costs, and $350,000 in FY17. Squillante said when that much is used from E&D, it’s important to budget conservatively, and be able to return money to the fund at the end of the year.
Squillante said there were no major issues uncovered in the audit, and most of the comments were informational or made as recommendations. One informational comment noted was that due to a new state standard, the following year’s audit (FY17) will show the total OPEB liability of $13.6 million, and not just Gateway’s share, so the district should be prepared to see that in the government-wide balance sheet in the audit.
Squillante also said the School Committee should consider reauthorizing the OPEB trust fund due to new wording in the Municipal Modernization Act, which contains more specific guidelines as to the treatment of the fund. She said she is recommending the same to all of her clients.
Squillante also asked the district to consider putting money aside for absence contract liability, or accrued sick time. She said the current sick-time liability for Gateway employees is $335,000. She said Mass General Law allows for such a fund to be created.
Other comments made were also due to the changing of government regulations. School Committee chair Michele Crane thanked Squillante for her work and her presentation to the committee.
