During the public hearing on Timberlane’s budget, Arthur Green questioned why the revenue budget for 16-17 showed $250,000 from capital reserves. There was no answer that night, Jan. 11, 2018.
Today the district’s unaudited annual report was published. Last year’s revenue budget still shows the same unexplained $250,000.
It’s odd because the voters did not authorize the withdrawal of any capital reserves on the 2016 warrant. Perhaps our auditors could trouble themselves to explain this bookkeeping oddity, as well as all the other ones we pointed out in a certified letter to them a few weeks ago.
Arthur Green sent this note to the auditors, Plodzik and Sanderson, on March 3:
To the Auditors:
I am a resident of the Timberlane Regional School District, writing to you in your capacity as auditors of the TRSD 2016/17 financial statements, to draw your attention to what I believe to be a significant discrepancy in the TRSD financial statements as published on March 2, 2018 in the TRSD Annual Report for 2016/17.
The actual revenue reported for 2016/17 is provided on page 36 of this document, under the column “2016-2017 Received”. Under this column, line 5250 shows “Trans- Capital Reserve” in the amount of $250,000. This is clearly incorrect.
- Revenue from the Capital Reserve fund would constitute a withdrawal of money from that fund.
- Withdrawal of funds from the Capital reserve in 2016/17 would have had to be authorized by a warrant article at Town Meeting in February/March of 2016. There was no such authorizing warrant article. There was in fact a warrant article authorizing a deposit to the capital reserve. This warrant article was approved, and the Expenditure report (page 4) shows on line 5250.930 that there was a deposit to the capital reserve of $250,000.
- If there was both a deposit of $250,000 and a withdrawal of $250,000, then the Capital Reserve fund would have the same balance on June 30, 2017 as it had on June 30, 2016. This fund is not included in the Annual Report, but I believe that the audit report will show that the Capital Reserve fund is higher by $250,000.
At the Timberlane School Board meeting on Sept 1, 2016, the board voted to draw $500,000 from the Fund Balance Retention to include in revenue for the 2016/17 year, thus mitigating the tax impact. The minutes of that meeting show that the Board was informed that the surplus carried forward from the prior year was $3.099 million. However, line 0770 of the Revenue report shows that the Unassigned Fund Balance was $3.599 million.
- The 2016/17 Revenue report shows no revenue from withdrawal of $500,000 from Fund Balance Retention. Clearly, that amount has been combined with the Unassigned Fund Balance
These mis-statements are material because
- The consumers of this report could justifiably conclude that there was no net change to the Capital Reserve fund in 2016/17, when in all likelihood the fund increased by $250,000
- The consumers of this report could justifiably conclude that there was no drawdown of the Fund Balance Retention in 2016/17, when in fact that fund was reduced from $700,000 to $200,000
- The consumers of this report could justifiably conclude that the operating surplus carried forward from 2015/16 was $3.599 million, when in all likelihood it was closer to $3.349 million.
I would also point out that I brought this matter to the attention of the administration, the board and the budget committee at the Public hearing on January 11 2018. At that time, I did not receive a clear answer, but I anticipated that the figures as published in the the Annual Report would have been corrected.
Please give this matter your attention during your preparation of the TRSD financial audit for 2016/17.