Nov. 26—SAN BENITO — An auditing firm is giving the San Benito school district a "clean opinion" on its annual financial report while citing officials' supplanting of payroll money with federal funds.
The certified public accounting firm of Carr, Riggs and Ingram pointed to officials supplanting $18.3 million in general fund payroll and non-payroll expenditures with Elementary and Secondary School Emergency Relief, or ESSER funds, Mathew Montemayor, a certified public accountant, told school board members.
"The most significant changes we noted in 2022 was there was some supplanted general fund payroll and non-payroll expenditures with your ESSER III funds," he told trustees during a meeting Tuesday.
"I believe you have a spending plan with the way you're supposed to be using those ESSER III funds and you have a plan to stick to that," Montemayor said. "Some of the funds were used for things like stipends during the year as well as some other payroll and non-payroll charges as well."
In July, Superintendent Theresa Servellon told board members the district was returning about $780,000 to the state after officials supplanted some special education department payroll funds with ESSER money.
"Because the previous administration supplanted payroll funds with Elementary and Secondary School Emergency Relief federal funds, the district did not meet the state's required amount of spending on special education salaries," Isabel Gonzalez, the district's spokeswoman, has stated. "The state is simply requiring that the district return the $780,000 of unused state funds."
The firm audited the district's financial records from June 30, 2021 to June 30, 2022, a period that included former Superintendent Nate Carman's resignation in March and Servellon's subsequent appointment as interim superintendent.
During his presentation, Montemayor told board members he was issuing a "clean opinion," adding, "We did not identify any type of material non-compliance. We did not identify any material weaknesses with internal controls over the way you spent those federal funds."
From June 2021 to June 2022, the district's total assets grew from $180.2 million to $180.6 million while officials cut liabilities from $183 million to $163.5 million, leaving the district in a net position of $21.58 million, up from $16.37 million last year, Montemayor said.
"You'll see you liabilities decrease as you continue to make your debt service payments on your existing bonds," he told board members.
During the audited period, the district's revenues dropped from $158 million to $148.38 million as a result of a cut in state funding, Montemayor said.
"Mainly the decrease is attributed to your state and other grants revenue," he said.
While the district's revenue included $16.1 million in property tax money, state and other grants accounted for $78.37 million while operating grants and contributions made up $52.2 million, he said.
Meanwhile, he said, the district's expenditures climbed from $134.7 million to $140.3 during the audited period.
From June 30, 2021 to June 30, the district's general fund revenue climbed from $113.5 million to $114.3 million while expenditures jumped from $87.7 million to $102.9 million, Montemayor said.
Of the district's $114.3 million general fund, 49 percent is made up of unassigned funds, enough to operate the district for five-and-a-half months in case of emergency, more than most districts, whose unassigned funds can operate them for 90 to 100 days, he said.
During the audited period, the district's capital assets increased from $89.4 million to $92.3 million, the result of a $40 million bond-funded project's construction of a performing arts theater, an aquatics center and an indoor practice field, Montemayor told board members.
"The majority of your capital outlay (or) increases in your capital assets represent your construction in progress," he said.
Meanwhile, the district's long-term debt stemming from the issuance of general obligation bonds decreased from $92.4 million to $87.5 million, he said.