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Orangeburg County schools: Former districts provided $18.6M; general fund balances dipped before merger | Local

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January 5, 2020
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Orangeburg County schools: Former districts provided $18.6M; general fund balances dipped before merger | Local
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Orangeburg County’s three former school districts transferred $18.6 million from their general fund balances to the new, consolidated Orangeburg County School District, according to year-end financial audits.



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Orangeburg Consolidated School District 5 transferred $12.9 million, OCSD3 transferred $3.4 million and OCSD4 transferred $2.3 million.

“I think the previous local school boards did an outstanding job to ensure we got to this time and place financially strong and in the best possible position,” district spokesman Dr. Jesse Washington said.

Finalized audits for all three of the former school districts were presented to the Orangeburg County School Board last month. The three former districts ended operations on June 30.

District Chief of Financial Services Michael Thom informed trustees that independent consultants are looking at the audits for the former school districts and the High School for Health Professions.

This report will be presented to the board during its Jan. 28, 2020 meeting.

OCSD5

Elizabeth Inabinet of McGregor & Co. informed trustees the OCSD5 audit was clean and that there were no findings of material weaknesses or significant deficiencies in financial reporting.

“District 5 has been blessed with a strong finance department that demonstrated fiscal responsibility in all areas of finance,” Inabinet said.

She said the district saw $65.7 million in revenues and $68.3 million in expenditures, leaving an operating deficit for the year of $2.6 million.

This reversed a trend for district. In 2017-2018, the district had an operating surplus of $1.5 million.

According to the audit, the district began the 2018-2019 fiscal year with a general fund balance of about a $15.5 million. It ended with $12.9 million.

“The district’s financial position is sound, with strong general fund reserves of approximately 18.4 percent of the district’s general operating budget,” the audit states.

“Despite the fact that the district’s expenses for FY19 exceeded revenues and resulted in a decrease in the fund balance, which was budgeted and anticipated, District 5 was still able to end with a strong fund balance and go into consolidation with a very strong financial position,” the audit continues. “The district continued to economize and operate as efficiently as possible without compromising the academic programs of the district.”

In other items, the audit notes the district did not have any debt issuances in 2019 and its capital fund balance at year’s end was $9.4 million.

The audit notes this $9.4 million balance would go toward existing projects such as the Brookdale Elementary School HVAC upgrades and Orangeburg-Wilkinson, Howard and Clark roof replacements.

OCSD3

Dawn Strickland of McGregor & Co. informed trustees that auditors did find a material weakness and non-compliance material related to OCSD3’s internal financial controls.

According to the audit finding, “three significant audit adjustments which affected the EIA (Education Improvement Act) special revenue fund, debt service fund and school building funds were proposed and posted to the district’s general ledgers to correct material misstatements.”

The auditor recommended that, “invoices should be reviewed for cutoff and recording in proper year, payment of short-term borrowings should be recorded as changes to short-term liability accounts to comply with GAAP (governmental standards), transfers of revenues to other funds should not be netted against the revenue account which distorts the actual revenue received and will result in transfers not balancing between funds.”


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A noncompliance issue was found regarding the district’s implementation of commercial driver’s license drug and alcohol testing.

The district was expected to conduct random controlled drug testing of at least 25 percent of bus drivers and random alcohol testing of at least 10 percent of the bus drivers.

For the calendar year of 2018, the district tested 8 percent of the drivers for controlled substances and 4 percent for alcohol.

“The district relied on testing companies to sample and test the appropriate number of drivers for applicable substances,” the audit notes. “The district did not follow up and verify the proper number of drivers were being tested.”

OCSD3 saw total revenues for 2018-2019 at $39.4 million and its total expenditures of $42.9 million for a net year-end deficit of $3.5 million.

The district’s general fund balance started the year with $5 million and declined to $3.4 million.

The school’s debt service fund started the year at $1 million and ended at almost $1.2 million.

The school building fund stated the year with $2 million and ended with a balance of $313,342.



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OCSD4

Emily Sobczak of the Greene Finney firm said there were no deficiencies in internal controls that were considered material weaknesses.

The audit noted OCSD4 allowed its general fund balance to fall below the state’s requirement.

The State Department of Education requires districts to have at least one month of general operating expenditures, or about 8.3 percent, available.

The district’s unrestricted fund balance was about $2.3 million, which was about 7.1 percent of the general fund operating expenditures for the year ending June 30, 2019.

Sobczak said district’s general fund balance, which decreased about $222,689 during the year, “is considered a little lower than we would like to see.”

Sobczak said the Government Finance Officers Association recommends local bodies have a minimum of two months or 16.7 percent of operating expenditures in their fund balance.

She noted the district’s fund balance was transferred to the new district for operations.

The audit also cited concerns that many of the district’s employees had overlapping duties and requested segregation of duties.

The district’s total revenues were $44.7 million and total expenditures were $46.4 million for the fiscal year ending June 30, 2019.

In other audit highlights, Sobczak said the district’s total capital assets were $34.9 million through June 30, 2019, which is a decrease of $700,000 from June 30, 2018.

Total long-term obligations for the district were $16.7 million, a decrease of $4 million from June 30, 2018.

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