The Lake Superior School District has discovered most of its deficit is due to a $447,000 budgeting error.
Lake Superior School District Board members received some unwelcome information at their regular meeting Tuesday, March 12. Business Manager Sara Girard presented the board with a revised budget, which includes a predicted net effect deficit of $756,000 from the district's general fund.
This is up significantly from the original budget summary, which had an estimated deficit of $61,000 from that fund.
"Well, clearly this isn't good news," board member Cyndi Ryder said.
Girard broke down the general fund expenditures by object type. This fund pays for the salaries and benefits, services, equipment and more. A few small changes in the expenditures, like higher costs of benefits and more services costs, account for some of the deficit.
The district also expected to sell the former high school location's land this year, but Girard said there hasn't been much interest in that, so she removed the sale estimate from the budget as a source of revenue.
But the biggest piece came from a likely error Girard found: a $447,000 error.
"When the board approved the budget our financial system did not reflect what the board approved. That was off by about $500,000," Girard said. "I'm not sure if there was a typo when he (former business manager Lance Takkunen) brought the budget to the board. I'm not sure what happened. So for the original budget, there was a placeholder to show what the board actually approved. Taking that out, and we've done a lot of looking through all these lines and old data, I don't know how that came about."
The board had questions.
"How can we not know what happened to a half of a million dollars?" President Tom Burns asked.
"That's why I think it might have been a typo? Because of how the report was presented to you," Girard said. "If there was a typo in what he put out, because it was just manually entered? That is my guess. That is my best guess."
Other board members asked how this wasn't caught by auditors. The board received a fairly positive audit report in January, but it was reflective of the 2017-18 school year, not the current year.
Ryder pointed out that a similar error occurred in the past when a large amount of money was credited to two funds accidentally.
"That could be a possibility, but I have gone through a majority of the lines to look," Girard said.
This will also drop the fund balance down significantly. Districts are advised to keep about 15 percent of their fund balance in order to maintain operating costs for two months. This deficit will drop the fund balance from 18 percent to 13 percent.
As for action, the board unanimously approved the revised budget report and will use the information when planning for the next year's budget, which will start at the next meeting.