MARSHALL — Hoffman & Brobst Manager Tamara Deutz presented the Marshall School Board with a Fiscal Year 2018 audit review at the work session meeting on Monday.

“This is for Fiscal Year ending June 30, 2018,” Deutz said. “You had an unmodified opinion, which is a clean opinion and what you want on the financial statements as well as the single audit.”

One of the highlights was that the district’s revenues exceeded expenditures by $54,000 in the governmental funds.

“That would be general fund, food service, community service, debt service, building project fund also,” Deutz said. Those were exceeded $54,000. That was mainly due to an increase in revenues, offset by the completion of the capital improvement and health and safety improvements. The increase in revenue is mainly because you guys had more students as well as an increase in the general education aid formula and voluntary pre-K is also in that, too, this year.”

In regards to the future, Deutz said Marshall Public Schools could expect to see a 2 percent increase in the formula for general education aid in FY ’19.

“Basically, if your student counts didn’t do anything — if they stayed stagnant — you’d still see an increase in revenue,” she said. “The school board also extended the board-approved referendum authority in the amount of $300 per adjusted pupil unit and accepts the $424 in Local Optional Revenue. That will be applicable for five years, beginning in FY ’19.”

Deutz added that the district is currently collecting community input to see if another building bond referendum should be proposed and what that referendum would look like. Marshall Superintendent Scott Monson said that the second community input meeting is slated 6:30-8 p.m. Wednesday in the media center at Marshall High School.

Deutz said the district’s enrollment projections continue to trend upward, but with the uncertainty of whether or not voluntary pre-K programs will continue in the future, those numbers were taken out of the counts in FY ’20 and ’21.

“Going back to FY ’17, you’ll see a slight improvement in enrollment,” Deutz said. “In ’20 and ’21, there’s a little bit of a drop. That’s mainly just the district not projecting the VPK program to continue. We don’t know what will happen, so it’s just a budgeting tool for you guys to not have that in there.”

Looking at fund balance and cash balance for the general fund — only Fund 1, which excludes transportation and operating capital — Deutz said MPS has had good growth.

“At the end of 2018, you had about $5.75 million in ending fund balance in the general fund and $5.5 million in adjusted cash balances,” she said. “That is very healthy.”

In comparing last year’s general fund revenue to this year’s, Deutz said there is “not much change at all.”

“The largest source of revenue is from the state, that’s with every school,” Deutz said. “And the federal revenue sources are just a small percentage, 3 percent, but they cause the most compliance requirements. That’s where your single audit comes in — $750,000 and more in federal revenue causes a single audit — so you guys have that.”

As in past years, the largest source of revenue the district receives is from the state. In 2018, 81 percent of the general fund revenue was from the state.

“There was higher state funding in 2018 because of that basic formula increase and also the enrollment increase,” Deutz said. “The decrease that you see in the bar graph for 2014 is when the state tax shift was going on.”

Deutz said it was a positive thing that there was basically no change proportionally between general fund expenditures from FY ’17 to FY ’18.

“Salaries and wages is the largest (66 percent) and then the next one is employee benefits,” she said. “That’s what we would expect to see. A school’s job is to educate students, and in order to do that, you need teachers. In every school, salaries and benefits are going to be your highest expenditures.”

Instructional costs — both regular and exceptional — account for the majority of the district’s expenditures.

Deutz also shared highlights from other district funds.

“The food service fund balance increased about $120,000 due to a slight decline in food costs, increased breakfast participation, addition of the voluntary pre-K program and increased enrollment from FY ’17 to FY 18,” she said. “The ending fund balance in the food service fund was about $325,000.”

Deutz said the community service fund increased about $115,000, which was due to more funding for Adult Basic Education and a decrease in various program expenditures in FY ’18.

“At the end of the year, the fund balance in the community service fund was approximately $395,000,” she said.

The building construction fund was zeroed out at the end of the fiscal year.

“Everything was spent for your energy conservation and indoor air quality improvement projects, so that fund was zeroed out,” Deutz said. “The debt service fund balance increased about $123,000. That’s mostly due to levying for the QZAB bond payments and those are set aside in an escrow account until the bonds mature.”

Deutz also said that MPS received the Meritorious Budget Award for the 2018 budget as as the Certificate of Excellence in Financial Reporting for the FY 2017 Comprehensive Annual Financial Report.

“I want to give a shout out to Dion and all his staff,” Deutz said. “They were great. Anything we needed, we got. And they answered any questions that we had.”

MPS Business Director Dion Caron thanked account specialist Russ Sanow for his special effort.

“Russ put about 80 percent of that together for us,” Caron said. “We couldn’t have done it without him. He did a great job.”

Board member Bill Mulso thanked Monson for outlining the many collaborations MPS has with Southwest Minnesota State University during a recent Regional Workforce Development Roundtable event that Minnesota State Chancellor Devinder Malhotra was part of.

“Devinder Malhotra was meeting with businesses and community entities, finding out challenges they’re facing with work force and looking at partnerships that various businesses, or school districts in our case, have with local institutions,” Mulso said. “Scott did a great job of highlighting the partnerships we have between MPS and SMSU. It was good for people to see the many ways we are working together and the opportunities that we have along with the same goal in mind. It creates a lot of opportunities for our young people.”

The board approved both action items, including the agreement to set 4 p.m. on Nov. 13 as the time and date of a special meeting to canvass election results.

Board members were also reminded that the Dec. 3 Truth in Taxation meeting will begin at 6:01 p.m.