This post focuses on the cafeteria and music revolving accounts. The music revolving account was reviewed by Roselli, Clark and Associates because of an agreement between the Ways and Means School sub-committee and the school committee budget sub-committee last spring during the FY2018 budget process. The district received the final report on the music revolving account on October 12th (linked below).
The district’s revolving accounts are separate from the district’s operating budget and student activity budgets. The student activity account audit was completed in August. The Student Activity Account Audit, Corrective Action Plan, guidelines and balances were detailed in a prior post.
After a significant deficit accumulated in the cafeteria revolving account many years ago, school committee and Town officials agreed that this revolving account would be zeroed out at the conclusion of the fiscal year, if in deficit. A negative balance in a revolving account typically indicates a budgeting problem or, in the case of the cafeteria, may indicate the need to increase the price of lunches.
The deficit in the cafeteria account this year spiked from prior years to about $100,000. About 70% of this amount was due to an increased priority placed on fresh produce and general food quality. Money has been identified to zero out this deficit. The school committee will be voting to transfer money from the international student choice account (detailed in an upcoming community concert post) to the cafeteria revolving account at the meeting on 12/19. This transfer typically takes place in the early fall. The transition to new personnel in the business office and the ongoing review of the music revolving account delayed this transfer until now.
Looking to next year, we will discuss adding money in the operating budget to support our food priorities or re-examine the prices charged for student lunches. A $25,000 to $30,000 loss in food services has been more typical in prior years. We cannot sustain the larger deficit created at the conclusion of FY2017. The Federal School Lunch program is highly regulated. Our staff does a great job navigating the regulations while attempting to increase student participation. For context of the typical and atypical deficit amounts, we typically spend about $1,000,000 per year on the school lunch program which is paid for by students purchasing their breakfasts and lunches.
The music revolving account showed a $51,322 loss at the end of fiscal 2017. The community concert series contributed to 78% of this loss. The non-community concert series loss in the music revolving account at the conclusion of FY2017 is roughly $11,300. Like the cafeteria account, this deficit indicates a budgeting issue that needs to be addressed as we create the FY2019 budget. I will write a future post specifically about the community concert series.
Like the cafeteria account, prior losses in this account were zeroed out before starting another fiscal year. The school committee will vote to zero out the current deficit at the 12/19 meeting using international school choice funds. We did not calculate the impact of the community concert series on prior year music revolving account deficits; however, the deficits in the music revolving account correlate to the initiation of the community concert series three years ago. With the series cancelled, I believe that the music revolving account will come back into balance as has been typical.
In addition to the deficit, the account review indicated that there were charges made to the revolving account that should have been charged to the operating budget. Reclassifying these charges would actually lower the revolving account deficit. The review also indicated that there were charges that should have been charged to the high school’s student activity account. Again, reclassifying these charges would further lower the deficit.
All of the findings in the review are being addressed by the business office. All music department purchase order/payroll/contracted service requests this year will require a second signature to ensure that they are being charged to the appropriate account – operating, revolving, or student activity. In addition, purchase orders are being grouped by number and associated with each production. This change will allow for an easier analysis of the costs associated with each show.
The auditor also had findings around the collection and management of money in regards to ticket sales and funds collected from students. I will address these concerns in a separate blog post.