By Chad Koenen

Publisher

The Henning School Board received a mixed bag of results from its annual audit report last week. 

On the one hand the school district had an extremely positive year financially, especially with an expansive building construction project. Enrollment continues to hold steady and even slightly increasing over recent years. On the other hand, the school board heard the auditor made several concerning findings in regards to payroll that they said needed to be quickly addressed.

During its regularly scheduled meeting last Tuesday night, Sara Niemela of Brady Martz and Associates presented the 2024 year end audit to the school board.

On the positive side the school board received $1.2 million in additional revenue in 2024 when compared to 2023, while spending just $41,326 more than last year. The basic general education revenue is determined by a state per student funding formula. Other state-authorized revenue, including excess levy referendum and property tax shift, involve and equalize mix of property and state aid revenue. The school district received a substantial amount of additional revenue last year due to its summer HVAC and parking lot project, which will also be spent in future years, but helped the bottom line in 2024. 

Another positive for the school district, also due in part from additional student enrollment and the revenue from the school building project, was the school district’s general fund grew by $850,787. However, Henning School Superintendent Melissa Sparks said some of the excess money in the general fund was tied to the school building project that had yet to be spent at the time of the audit. 

The school district also took in more revenue than it had budgeted for, while also spending just slightly more money than it had budgeted for in 2024. The school district received $622,521 in additional revenue than its budgeted amount, while also spending just $287,350 in expenses over its budget. 

“Overall your financial position is better than you anticipated when you set your budget,” said Niemela. 

While there were a number of positives in regards to the annual school audit there were a few items that Niemela said need to be addressed and were of a concern. 

Two of the findings of the audit related to a lack of internal control over financial reporting, which is found on a vast majority of school district audits across the state due to a lack of staff and the cost effectiveness of having enough office staff in place to have enough internal controls. 

Another finding was due to the school district’s June 30 bank reconciliation and subsidiary records for accounts receivable and accounts payable that did not agree to the general ledger. According to the audit the school district was unable to provide supporting documentation for payroll liabilities and source documentation to support journal entries written during the fiscal year and was not provided. 

Sparks said the issue regarding payroll is not a new one and contended this has been going on for quite some time. She said the school district is working with Freshwater Education District to address the concern.

“We already got a lot of this plan in place on how we are going to get this back on track,” said Sparks.

The audit also found that the school district had deposits, which were in excess of deposit insurance and the school district did not have sufficient collateral to cover the deposits. Niemela said this can occur with a sudden influx of cash, like a school building project, but needed to be monitored in the future. 

Due to the findings the auditor was unable to give a qualified and unmodified opinion to the school records due to the inadequacy of accounting records in the governmental activities, general fund, food service fund and community service fund regarding payroll liabilities. 

Report from Freshwater Education District

Immediately following the audit report the school board heard a recorded message from Jordan Anderson, of Freshwater Education District, who the district hired as a consultant for its business manger needs. Anderson said the payroll finding from the audit was a significant issue that needs to be addressed.

“This is a significant issue and that is something we are looking to address,” he said. “This isn’t something that has happened in the last year or two year, it is something that has been happening for some time.”

He said Freshwater Education District has already begun working on addressing the payroll issue and will keep the school board updated on the issue. 

On the positive side, Anderson said the school district also inched higher in its unassigned fund balance. As of last week’s meeting the school district’s unassigned fund balance increased to 27.17 percent of total expenses, which is above the school district’s 25 percent fund balance policy. In recent years the school district had just 23-24 percent of expenses in its unassigned fund balance.

In other news

• Heard a presentation from board chair Rod Thalmann about the Minnesota School Board convention and some of the items that he learned during the annual convention in the Twin Cities.

• Held a first hearing of Henning Title 1: District Family and Engagement Policy.

• Approved removing the school board representation from the Henning Wall of Fame committee. 

• Approved moving forward with a work session on January 27 to explore potential cooperative opportunities for extracurricular activities and athletics. The school board held the workshop, but no discussion was held last week in regards to what potential cooperative opportunities for extracurricular activities and athletics, or who a potential coop would be with, was discussed during Tuesday’s school board meeting. More information about Monday’s meeting will be featured in next week’s issue of the Citizen’s Advocate, and online at www.henningadvocate.com