Pike County Schools District received a positive 2019-20 audit, but the report also highlighted several concerns for how the district could be impacted by the COVID-19 pandemic in the future.
During a meeting on Feb. 18, the Pike County Schools Board of Education was presented the district’s 2019-20 audit by Don Wallen, of Wallen, Puckett & Anderson, PSC. The audit provided an overview of the district’s financial statements and activities during the past fiscal year, ending on June 30, 2020. Wallen said that they verified the district’s finances for any potential errors in recording or reporting transactions.
“We found no violations of any federal or state laws, and all of the transactions had been properly recorded and reported,” Wallen said. “We did note that we found a few examples of errors of not following the Redbook at some of the schools. That’s not an unusual thing. I’ve been doing school board audits for almost 50 years now, and I do not recall ever doing one where we didn’t find something at the schools.”
There were several highlights of the report that Wallen shared with the board, with the first being that the district reduced its debt by $7 million over the past year and had improved its net position. The district’s system-wide net position was about $535,000 by June 30, 2019, and it increased to $2.7 million by June 30, 2020.
The district’s General Fund had about $82.76 million in revenue, which consisted of a beginning balance of nearly $5.4 million, the state program (SEEK) funding, property, unmined minerals, utilities and motor vehicle taxes. The beginning balance also included $350,000 in reserved for paid sick leave and $750,000 in reserved for worker’s compensation.
During the 2019-20 fiscal year, there were about $75.57 million in General Fund expenditures, which consisted primarily of salary and benefits, utilities, insurances, new vehicle/buses, computers, instructional supplies, maintenance and transportation supplies, general supplies contract and professional services and other items as determined by necessity, according to the report.
Wallen noted that receipts for the General Fund were less than budgeted by about $456,000, which the district attributed mostly to a decrease in utility taxes. He said that the general fund ended with a surplus of nearly $7.2 million, compared to the surplus of more than $5 million left by June 30, 2019.
The district spent more than $2 million less than it was expected to over the past year, which Wallen said was directly related to the COVID-19 pandemic.
“When you don’t have school, you don’t run buses, you don’t hire substitute teachers and you don’t spend as much money,” Wallen said. “The COVID (pandemic), in effect, saved us money this year. Obviously, we’d rather not have it, but we’ve had it.”
Despite that, he said, the pandemic’s lasting effects on businesses and employment may cause more people to leave the district in the coming future, due to the loss of available jobs.
“In fiscal year 2021, the biggest concern of the district will be the instability of the collection of tax related revenues, which are impacted by the economy and the continual decline of the coal and natural gas industries in the area,” according to the audit report. “The number of businesses closing and/or filing bankruptcy has a negative effect on both general property taxes and unmined mineral taxes, as well as the loss of students due to families leaving the area to look for employment.”
Wallen said that he believed the board members should be prepared for the loss of students in particular.
“We don’t know what the effect is going to be in the future. I would suspect that it’s going to cost us more in the future,” Wallen said. “I think there’s a possibility we could have less students. Small businesses have had a hard time, and they’re leaving the area and taking their kids with them. That’s something we don’t want to look forward to, but we may have to live with that.”
Additionally, the report notes that the board’s decision to not pass the compensating tax rate for 2020-21 and other factors could impact the district’s revenue and financial future.
“Due to the increase in taxpayer burden, the board did not pass the compensating tax rate for 20-21, which reduces the district’s potential tax revenue,” according to the report. “In addition, the district faces the continual underfunding of the state SEEK program and full-day kindergarten, the continual loss of students and fluctuating fuel and energy costs. Other major concerns for the 2020-21 budget include an aging bus fleet, aging facilities and overcrowding at a major school. Lastly, the full effect of COVID-19 is unknown.”
After Wallen’s presentation, the board approved Wallen, Puckett & Anderson, PSC, to perform the district’s annual audit for the 2020-21 fiscal year, which ends on June 31, 2021.
During the board’s time for comments, Superintendent Reed Adkins talked about the questions that he received from several parents regarding making their virtual days into snow days. He said that he has “made it very clear” to staff that they should give the students the opportunity to make up their virtual work if they may not have finished it due to any power or Internet outages this past week, following the three recent back-to-back winter storms.
“We are going to receive some additional CARES (Act) money, and through that, we’re going to try to do some things to try to help our kids that have fallen behind through this COVID situation,” Adkins said. “We’re going to be rolling that stuff out a little later. We’re excited about the opportunities that some of this money is going to bring to our school system. It’ll make a difference for our kids.”
Also, at the start of the board meeting, Superintendent Reed Adkins took a moment to recognize Pike County’s board members in honor of Board Members Appreciation Month, which is observed in January. Adkins presented board members “Heavy” Blankenship, Stephany Lowe, Dewayne Abshire, Nee Jackson and Shane Hurley with certificates, and he shared words of praise for them, saying that their job was thankless and he appreciated them more than they knew.
“I know I’m biased, but I think we have the best board members in the state of Kentucky. I deal with people all over the state in different capacities, and a lot of the horror stories I hear across the state, we just don’t have here,” Adkins said. “We have five board members that are really dedicated to doing the right thing for children, and I appreciate them a whole lot more than they know.”