The Natalia ISD School Board postponed approval of the 2018-2019 audit after questions emerged regarding the transfer of $756,009 from the Capital Projects fund to the General Fund, but took no action on the audit or on personnel issues regarding Executive Director of Finance Paul Michels during a Special meeting held on Thursday, October 24.
Board President Eric Smith questioned the transfer during a presentation by auditor Stephen Horton of Coleman, Horton & Company during the Regular meeting on Monday, Oct. 14.
“In previous years, the district has elected to transfer money from the General Fund to the Capital Projects fund to differentiate money for potential capital projects,” Horton said. “And that money has just been sitting there over the last several years…with the bond money coming in, the decision was made by the Board to return that money back to the General Fund.”
When Smith asked when the Board had voted to move the money in question, Michels said it was moved in the audit.
“The Board had moved that money years ago for a purpose, and now it’s moved back?” Smith asked. “That’s what my confusion was, who made the decision to move it back?”
Michels denied making the decision to move the money, and Smith asked Horton if the transaction was shown on the paperwork the district provided for the audit.
“The transfer was reflected on the accounting records,” Horton said.
Later in Horton’s presentation, Michels stated that some Certificates of Deposit had matured.
“The CD material should stay in unless there’s a decision made to move it from Capital Projects,” Horton said.
Despite the questions around the money transfer, Horton reported that the district’s finances are in good shape.
“The bottom line is, this is what we call an unmodified opinion, which is the best level of opinion that you can receive,” Horton said, “and one that you as the Board and the administration should be very well pleased with.”
According to the audit, the district has $28,805,894 in total assets and $24,432,722 in total liabilities, for a positive net position of $4,194,078.
Revenue for the fiscal year, which ran from July 1, 2018 to June 30, 2019, included $10,997,899 in the General Fund, $38,607 in the Capital Projects Fund, and $2,378,857 classified as Other Funds, for a total of $13,415,363.
Expenditures included $10,634,851 from the General Fund, $2,030,460 from the Capital Projects Fund, and $2,195,815 from Other Funds, for a total of $14,861,126.
“So as you can see, we spent $1.4 million more than we brought in on a district-wide basis,” Horton said.
Fund balances as of June 30 were $6,478,330 in the General Fund, $10,854,775 in the Capital Projects Fund (the result of the bond issue that voters approved in the November 2018 election), and $939,163 in Other Funds, for a total of $18,272,268.
Horton said that comparing the General Fund balance of $6.4 million to its fiscal year operating expenses of $10.6 million showed that the district has almost seven months operating expenses in reserve.
“From an accounting standpoint, anything three months or better is very healthy for a governmentalish entity,” Horton said.
A motion by Smith and Gordon Gentry to postpone approval of the audit pending more information about the $756k transfer passed with the unanimous support of Fernando Garza, Tiffany Rodriguez, Paul Almendarez, Andrew Besa, and Jack Bradley, Jr.
The audited budget must be approved and submitted to the Texas Education Agency by Wednesday, Nov. 27.
The next Regular Board meeting is scheduled for Monday, Nov. 11.
By Marly Davis