Auditor gives Concord School District a clean opinion; no control deficiencies found

Scott McIntyre, a partner with CBIZ, presented the Concord School District Finance Committee with the district’s audited FY2024 financial statements and related reports, saying the auditors issued an unmodified (clean) opinion and identified no material weaknesses or significant deficiencies in internal control.

McIntyre opened by describing the governance letter required by auditing standards and emphasized that the statement in the letter identifying a “significant risk of a material misstatement” is a required classification in every audit and does not itself mean a material error was found: "That means we in turn have to identify specific audit procedures to mitigate that risk," he told the committee.

The audit found no disagreements with management and no material audit adjustments. McIntyre said the auditors assisted district staff with converting the district’s books from modified-accrual to accrual for the financial statements, a practice they perform for many public-sector clients and which the governance letter discloses.

McIntyre reviewed key long-term accounts. The district’s net pension liability was reported at $78,900,000 (measured as of June 30, 2023), and the auditors noted the liability uses a 6.75% discount rate. McIntyre explained the net pension liability reflects the district’s proportionate share of the New Hampshire Retirement System’s actuarial liabilities less plan assets and said the retirement system is on track in the actuarial schedule to be fully funded by 2039 if assumptions hold: "You keep doing what you're doing for the next 14 years, that number becomes 0," he said. On OPEB, McIntyre summarized two pieces: an implicit subsidy from allowing retirees to remain on active health plans and a smaller medical subsidy administered through the New Hampshire Retirement System.

Turning to governmental funds, McIntyre said the district’s total fund balance was $28,900,000 and highlighted components: committed fund balance (largely capital reserve/expendable trust funds) totaled $25,100,000; unassigned fund balance was $3,400,000, roughly 3.5% of FY2024 operating expenditures. He explained the unassigned balance declined by about $1,100,000 because the district used roughly $4.5 million in fund balance during FY2024 (largely moved into capital reserves), while budgetary results showed a combined operating revenue/expenditure surplus of about $3,400,000 (revenues exceeded budget by $588,000; expenditures were under budget by $2,800,000): "Positive budgetary results of operations softened by the planned use of existing fund balance," McIntyre said.

McIntyre also noted capital activity: the capital projects fund qualified as a major fund for FY2024, capital reserves increased nearly $5,000,000 year over year, and there was a $2,100,000 transfer in from capital reserves to the capital projects fund to pay project costs. He pointed the committee to footnotes for details on collateralization (the district does not participate in tri-party collateral arrangements) and long-term debt amortization, noting about 70% of existing long-term debt is scheduled to be paid off within the next 10 years—an item that credit reviewers often ask about.

On federal compliance, the auditors issued the single-audit (Uniform Guidance) report and tested the National School Lunch Program and ESSER funds. McIntyre reported: "We did not identify any significant deficiencies in or material weaknesses in internal control, nor did we find any areas of noncompliance over the application of federal grant expenditures." He added that single-audit materials will be uploaded to the Federal Audit Clearinghouse (FAC) as required and copies are provided to bond counsel, rating agencies, the Department of Education and other stakeholders.

Committee members asked clarifying questions about pension measurement and discount rates; McIntyre clarified the pension liability measurement date (June 30, 2023) and said the 6.75% discount rate used for accounting is a realistic assumption for valuation purposes. A committee member noted that the legislature sets contribution policy under state statute (RSA citation mentioned during the discussion).

After a brief wrap-up and questions about where the reports are posted, a member moved to adjourn; the motion was seconded and approved by voice vote.

The district’s FY2024 audited financial statements, governance letter, and single-audit report are publicly available (the presenter noted the files are provided to the city, bond counsel, rating agencies and uploaded to the Federal Audit Clearinghouse).