В Сан-Диего выявлены серьезные расхождения в финансовых отчетах пяти школьных округов

Commentary San Diego County has 42 school districts and nine of them had major movement in their fiscal status for the fiscal year ending June 30, 2024. But five of them leave the readers of their annual reports a bit confused. By obtaining their audited financial statements, looking at the unrestricted net position (UNP) in the balance sheet (statement of net position) and dividing it by the population the district serves, the per capitas tell a fascinating story. Let’s start from the bottom and move our way up. Chula Vista Elementary dropped 15 places in the annual rankings. It had revenues in excess of expenditures of $72.6 million, transferred $63.3 million into restricted assets, and appropriated $150.3 million into net investment in capital assets. The net result was an increase to its unrestricted net deficit of $141.0 million. But there’s a problem. The actual capital assets only increased by $61.1 million and the related liabilities increased by $83.2 million. This means the net investment in capital assets should have decreased by $22.1 million, not increased by $150.3 million. Had the net investment in capital assets decreased from $122.0 million to $99.9 million, that would be closer to the total capital assets of $578.4 million, less related liabilities of $470.5 million, or $107.9 million. Not calculating the net investment in capital assets correctly impacts the unrestricted net position and adversely reflects the true fiscal position of the district. This is why the Governmental Accounting Standards Board (GASB) has been contacted with a request to require a mandatory disclosure providing the details for the amount that is reported. Accuracy is critical. Or the rankings are jeopardized. GASB issued Statement No. 103 in April of 2024, which makes stronger recommendations for management’s discussion and analysis preceding the basic financial statements, including “significant capital asset and long-term financing activity.” Let’s hope its implementation is a contributor to solving this common reporting error. Poway Unified School District had revenues in excess of expenditures of $34.6 million, transferred $35.1 million into restricted assets and supposedly appropriated $203 million into net investment in capital assets. The net result was an increase to the unrestricted net deficit of $203.5 million. But wait. Acquisitions for capital assets were $14.8 million and the increase in accumulated depreciation was $30.7 million, for a net decrease of $15.9 million. There were no significant additions. And the total long-term liabilities only increased by $15.8 million. With related liabilities of $1,033 million and capital assets of $838.3 million, the 2023 negative balance of $196.8 million should have stayed roughly the same, instead of jumping up to $6.2 million. And we have another exhibit for GASB to require the implementation of a disclosure providing an explanation of the amount attributed to net investment in capital assets. The district dropped eight places. Grossmont Union High School District had revenues in excess of expenditures of $1.2 million, transferred $30.5 million into restricted assets and saw its net investment in capital assets decrease by $1.1 million. It also had a prior period adjustment of $10.7 million. Combined the unrestricted net deficit grew the old fashioned way, by $38.9 million, dropping it six places. San Ysidro School District had revenues in excess of expenditures of $3.4 million, transferred $34.4 million into restricted assets, and reportedly increased its net investment in capital assets by $11.6 million. Combined, the unrestricted net deficit increased by $42.6 million and it also dropped it six places and into last place. But wait, there was relatively no change to the capital assets and the General Obligation Bond debt increased by $31.7 billion, making the amount for net investment in capital assets appearing, once again, to be in need of a GASB reconciliation pronouncement assist. Solana Beach School District had revenues in excess of expenditures of $10.8 million, pulled $7.8 million out of restricted assets, and increased its net investment in capital assets by $21 million. The net result was an increase to its unrestricted net deficit of $2.4 million. It dropped five positions. Santee School District had revenues in excess of expenditures of $0.6 million, transferred $1.3 million into restricted funds, and increased the net investment in capital assets by $0.8 million. It resulted in an increase of $1.5 million in its unrestricted net deficit and dropping it five places. Valley Center-Pauma Unified School District supposedly had expenditures in excess of revenues of $17.9 million, transferred $2.7 million into restricted assets, and allocated $2.8 million into net investment in capital assets. Combined, it should have increased the unrestricted net deficit by $23.4 million. But the unrestricted net deficit actually only improved by $7.0 million. That’s a $30 million difference! Spending way too much time reviewing the audited financial statements, the only reasonable explanation I can provide is that the Statement of Activities (income statement) is incorrect. The prior year’s total expenses were $53.5 million and were $47.6 million for 2022. For 2025, it was $66.2 million. For 2024 they were $199 million. And business-type activities were not delineated. The 2024 amount did not fit the trend. I can only assume that the statement of activities belongs to a completely different school district client of the auditing firm. I sent the Chief Business Officer (CBO) an email to see if my suspicions were correct. Perhaps, with the correct income statement, we can see why this district moved up seven places. This attempt to contact the District’s CBO and director of finance was unsuccessful. If you reside in the district, you may want to contact them for a reasonable explanation. Lemon Grove had revenues in excess of expenditures of $4.1 million, transferred $1.9 million out of restricted assets, and somehow reduced its investment in capital assets by $10.8 million. Combined, the unrestricted net deficit was reduced by $17.6 million, which means we have $0.8 million unaccounted for. Lemon Grove continues to have trouble with calculating the net investment in capital assets. One would think that it sold off some $11 million in capital assets, but it actually had construction in progress during the year of $20.8 million. The other possibility would be borrowing more for this project than what was spent, but this is also not the case, as financed purchases increased by $17.8 million, not $28.6 million. This is where a requirement by GASB to include a disclosure supporting the amount provided for net investment in capital assets would be extremely helpful. The strange soup that this district is cooking had it jump up nine places. We’ll just have to wait for things to settle down to find out the true story, as the financial statement disclosures didn’t provide the needed clues. Now let’s see what we can uncover with the two biggest movers during the year. Both districts jumped up an amazing 24 places. Julian Union High had revenues in excess of expenditures of $209,540, transferred $8,249 out of restricted assets, and reduced its net investment in capital assets by $2,739,899. The combination should reduce the unrestricted net deficit by $2,957,688. But the financial statement declares that it dropped by $2,941,190. Now to find the missing $16,498. Before we do that, the capital assets on the balance sheet only dropped by $156,062 and long-term liabilities by $138,039. GASB, where are you? And good luck trying to find the $16,498 anywhere in the disclosures. But you at least have the supposed reason for its big jump up in the rankings. Borrego Springs Unified has been in last place for a few years. For this year, it had revenues in excess of expenditures of $1.9 million, pulled $3.2 million out of restricted assets, and appropriated $0.9 million toward net investment in capital assets. The net result reduced the unrestricted net deficit by $4.2 million. There you have the accounting details to provide you with information to possibly direct to your district’s board of trustees or chief business officer. Let’s also hope that they become aware that someone is watching and reporting on the audited financial statements they produce. And maybe in future years we’ll see more accurate reports with better footnotes and disclosures.  Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.