SOUTH ORANGE / MAPLEWOOD, NJ — The South Orange–Maplewood School District heard an audit report of the 2018-2019 school year at its Jan. 27 meeting, learning that all financial operations during the year were working effectively. The report was presented by Robert Morrison of the accounting firm Hodulik & Morrison, who has been working in the district for several years.
Morrison started the report by talking about the $140 million capital improvement project that will be going on in the district over the next year and a half, doing renovations and building additions on nearly every school in the towns.
“I love this district because of the beautiful buildings that you have,” Morrison said at the meeting. “But I look at them and I say, ‘They’re beautiful, but they’re old.’ There’s a lot of deferred maintenance. So I’m happy you’ve gotten the capital budget. That will go a long way towards all of us getting a better night’s sleep (without) worrying about something mechanical breaking in one of the buildings and you having to use all of your free balance to pay for it.”
BOE President Annemarie Maini asked if Morrison thinks the district will have to hire staff to oversee the capital improvements. Morrison said it depends on the relationship between the district and the project engineers — if the engineers are heavily involved in the daily operations, the district might not have to hire anyone else.
Morrison said when the accountants are working on the audit, they are looking at the district’s financial statements to see if they are correct, consistent and following the right procedures.
“Your financial statements were materially correct. We found nothing that was incomplete about them; you followed the appropriate account principled and you applied those principles from year to year,” he said. “That’s what’s known as an unmodified opinion. It’s the best report I can issue. We were very satisfied with the financial statements presented to us.”
According to Morrison, the district’s free balance is $3.493 million.
“You were able to enhance some capital outlays, some capital reserves, some maintenance reserves,” he said. “You also were able to put some money into tax relief for the 2019-2020 budget and the 2020-2021 budget.”
Part of the report focused on grant money the district has been awarded. Because some grants have requirements about what the money must be spent on, Morrison and his staff audited those programs as well.
“You spent roughly $3.6 million on grant programs, the majority of it federal money, some state and some local funds,” he said. “We pick out programs, which can be based on the dollar value of the program and the complexity of the requirements for the individual grant, and we look at how new each grant is to the district. The newer the grant, the newer the program coordination, and, if the program coordinator is on a learning curve, they’re more likely to make a mistake.”
No mistakes were found in the district’s grant programs, according to Morrison.
In addition, the auditors searched the business office, payroll, bill listings, hiring practices, health benefits and pension enrollment for the report.
“Based on what we saw and what we tested, your internal controls are adequately designed for an organization of your size,” Morrison said, adding that all federal, state and board policies were in compliance.
Morrison said the only irregularity in the district was that it overspent on food service, but the problem was addressed before his staff began the audit, so it is not in the report.
BOE member Johanna Wright asked about the student activities account and how much money is in it. Morrison said there is approximately $450,000 in the account, of which approximately $360,000 is associated with Columbia High School. The student activity funds are not controlled by the central office but rather by the individual schools. Business Administrator Paul Roth periodically reviews the expenses that come out of the account.
“When I send my staff out here, I tell them I want them to find something, because I have to go to the board,” Morrison said. “If they don’t find something, the board’s going to think I’m not doing my job. They didn’t find anything. That’s a compliment to your business office that the controls are working the way they’re designed. We have no recommendations, which means the board is not going to have to adopt a corrective action plan, and it indicates our satisfaction with the operating results.”
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