Royal Oak Schools accepts draft audit as board warns state budget impasse leaves funding uncertain
Summary
The Royal Oak Schools Board of Education on Sept. 11 accepted a draft independent audit for the fiscal year ending June 30, 2025, but auditors said the single-audit portion is pending federal guidance and the district is watching a state budget impasse that could affect state aid timing.
The Royal Oak Schools Board of Education on Sept. 11 accepted a draft independent audit for the fiscal year ending June 30, 2025, while auditors warned the final report remains pending federal guidance and the district is watching a state budget impasse that could affect state aid timing. Jamie, audit partner with Yo & Yo, told the board the district’s financial statements received an unmodified opinion, the cleanest audit result, but the single-audit (federal compliance) portion is delayed because the federal Compliance Supplement has not been released. Jamie said the Michigan Department of Education (MDE) will not accept a final audit file until auditors receive that federal guidance.
Why it matters: The draft audit showed that the district ended the year with a general-fund cash balance of about $21 million, a reported fund balance of about $16.6 million (about 20 percent of general‑fund expenditures) and receivables described as $8.4 million “due from other governmental units,” which auditors said included roughly $7.1 million in July and August state aid not yet received. Auditors also highlighted an accrued salaries payable balance of about $10.4 million at year end. Superintendent Dr. Topelski and board members framed those figures as evidence the district is managing within recommended reserves, while warning that state and federal timing issues could affect cash flow and reporting schedules.
What auditors said: Jamie told the board the single-audit delay is outside the district’s control. “We have draft forms but we cannot finalize the single audit until the federal supplement tells auditors what to test on each federal program,” Jamie said. Joey, audit manager with Yo & Yo, summarized that the district’s independent audit work is effectively complete and that the outstanding item is the federal compliance guidance needed to finish the single-audit report. The auditors said there were no material adjustments required, no significant deficiencies in internal control, and no management recommendations that rose to the level of reportable findings in the draft.
Board action and next steps: Trustee Van Heitzman moved and Trustee Cook seconded a resolution to accept the independent audit report as presented. The board approved the motion by voice vote. The auditors and district finance staff said they will finalize the single-audit portion and refile required reports once federal guidance and MDE direction arrive; MDE has a statutory external filing deadline in the fall and auditors said their worst-case internal filing contingency would be Nov. 1 if federal guidance remains unavailable.
Budget impasse and program impacts: Separately, the board adopted a resolution urging the community to contact state legislators to resolve an ongoing Michigan state budget impasse for fiscal 2026; the resolution noted the board had adopted a budget by the statutory July 1 deadline despite the lack of final state guidance. Board members and staff said the dispute matters because state aid timing and certain program rules (including the federal single-audit schedule) affect district cash flow and reporting. Finance staff reported that school meals are being provided to all students at no charge through Sept. 30 while the district awaits state guidance on meal funding beyond that date; families were urged to complete free-and-reduced applications regardless of the temporary universal meal status.
Background/detail: The auditors noted the district expended proceeds from its 2020 bond during the year and completed a bond refunding that affected the presentation of certain revenues and expenditures in the nonmajor governmental funds. The auditors also reported implementation of two recently issued GASB standards affecting compensated absences (GASB 101) and certain risk disclosures (GASB 102), and they said the district’s single-audit testing included the child nutrition cluster with no findings reported in draft.
What the board said next: Trustees thanked finance and operations staff for producing a clear draft and noted the board will circulate the audit and resolution to state officials as requested. The district will publish the finalized audit once federal and state steps are complete.
