Hamtramck board accepts final 2023–24 audit, approves budget amendment; auditors flag untimely reconciliations and $10.2 million deferred federal revenue

The Hamtramck Board of Education on Wednesday accepted the district—s final audit for the 2023 24 fiscal year and approved a 2024 25 budget amendment after an extended presentation by the district—s auditors about federal grant timing and internal-control weaknesses.

The auditors, from the firm Yo and Yo, issued an unmodified opinion on the financial statements but identified one material weakness: a lack of timely reconciliations of accounting records. Auditor Brian Lisonbee told the board the district had to defer about $10.2 million in federal grant revenue because the funds were not collected within the 60-day recognition window, a timing issue that reduced the reported general-fund balance from roughly $18 million (if recognized) to $7.9 million at June 30, 2024.

The audit matters mattered because deferred federal reimbursements and large capital outlays affected year-to-year comparisons of revenue and expenditures. In fiscal 2024 the district reported roughly $58.8 million in revenues and $70.8 million in expenditures, producing an $11.9 million decrease in fund balance; auditors said capital outlay (including HVAC and building work) accounted for a large portion of the spending increase.

"We issued an unmodified opinion," Lisonbee said during the presentation, adding that the accounting was accurate once reconciliations and documentation were provided but that the district must improve timing. "We had one material weakness, which was lack of timely reconciliations." He said the audit team received required reconciliations and federal-award schedules months after field work began, which delayed the audit work.

School finance staff told the board the deferred revenue largely results from the timing of construction invoices and federal reimbursement processes. District finance staff member Cindy explained the deferred amount is in federal programs and said the district expects recognition of the reimbursements in the current school year once reimbursements are processed.

Auditors also reported two significant deficiencies in federal-award compliance related to payroll documentation in ESSER and Title I testing samples; in those instances the auditors said sampled payroll records were not supported. The audit report includes corrective-action plans and the auditors said they will test corrective steps in next year—s single-audit procedures.

Board action and other votes

- Acceptance of final audit (Resolution 4): passed (5 ayes, 2 absent). The motion to accept the final audit was moved and seconded and the board voted to approve the auditor—s final report for 2023 24. - Approval of 2024 25 budget amendment (Resolution 5): passed (5 ayes, 2 absent). The amendment reflects changes that include carryover and grant activity described in the audit presentation. - School of choice implementation (Resolution 6): passed (5 ayes, 2 absent). The board directed administration to implement the district—s school-of-choice plan for 2025 26 with application dates and priorities as stated in the motion. - DTE three-phase electrical work at 3385 Norwalk Street (Resolution 7): passed (5 ayes, 2 absent). The board approved installation of a commercial feeder and new line extension; the motion text on the record included a "total cost not to exceed" amount as read during the meeting (see provenance). - Consent agenda (Resolution 8): passed (5 ayes, 2 absent). - Closed session (Resolution 2) for collective bargaining/attorney-client strategy: passed earlier in the meeting (6 ayes, 1 absent).

What auditors and staff recommended

Auditors recommended the district put controls in place to ensure monthly reconciliations and timely documentation so the audit can be completed and filed on schedule next year. The management response included hiring and staffing adjustments, and the audit report contains corrective-action plans for the payroll documentation findings. The governance letter that accompanied the audit also contained management recommendations, including review of food-service net cash resources and monitoring of requested grant amounts.

Numbers and context

- General fund assets (reported): about $40.7 million; liabilities just under $22.7 million; deferred inflows about $10.2 million. - Reported general-fund ending balance (per audit): about $7.9 million; if the $10.2 million deferred federal revenue were recognized, the auditors noted, the fund balance would have been roughly $18 million. - Revenues for 2023 24: approximately $58.8 million; expenditures: approximately $70.8 million. - Student count used in cost-per-student metrics: 2,890 students. - Capital outlay increased by about $10.8 million year over year and accounted for a notable share of the expenditure growth.

Next steps and board directions

The board accepted the audit and the budget amendment. Auditors said they will verify corrective actions during next year—s audit and recommended the board maintain monthly closing and reconciliation schedules so audits can be completed and filed by the November 1 deadline in future years. District staff said they are working with the Michigan Department of Education (MDE) and federal program administrators on timing and documentation for federal reimbursements.

The board meeting also included routine consent items and a vote to approve DTE service work for a specific site; board discussion emphasized that several large federal grants (ESSER allocations and Title I funds) have driven both revenue volatility and higher capital spending over the past three years. The board directed administration to continue improving internal controls and to provide follow-up information on corrective actions in future finance updates.