Auditors give Hazel Park an unqualified opinion but flag material weakness; general fund balance falls below state threshold

External auditors presented the Hazel Park School District’s fiscal-year 2024 audit and an accompanying single-audit report and recommended several control and reporting improvements while issuing an unqualified opinion on the financial statements.

Amber Sutter, engagement partner for the district’s auditors, told the board the auditors issued an unqualified (clean) opinion on the June 30, 2024 financial statements. The auditors also reported a material weakness in internal control over financial reporting, driven by late or incomplete schedules, material adjusting entries and repeat issues from the prior year. A single-audit finding noted a significant deficiency on Title I: the district failed to meet a 1% parental-involvement spending requirement for that grant.

Key figures presented by auditors and staff: - Total governmental net deficit: approximately $39,000,000 (auditors attributed most of this to pension liabilities). - Net pension liability reported on the balance sheet: about $80,000,000. - Net OPEB position flipped to an asset position (reported as approximately $1.4M on the statements). - Total governmental assets reported near $80,000,000; noncurrent liabilities including bonds about $38,000,000. - General Fund balance (reported): $992,877 (approximately 1.8% of expenditures by the figures presented at the meeting), down from about 11.3% the prior year. - Unavailable or late federal revenue (grants): about $1.8 million recorded as unavailable because receipts fell outside the 60-day reporting window.

Sutter described several auditor recommendations in an attachments list: file a food-service spend‑down plan if needed; improve year‑end closing procedures and payables timing; review and approve capital asset purchases at board level; strengthen IT controls and draws for federal grants to ensure drawdowns are recorded within 60 days; and reconcile activity run through district accounts for separate nonprofit groups (the auditors flagged Junior Vikings as an example to evaluate).

Board members asked for clarification about specific numbers and requested a supplemental financial update to bring the board up to present-day cash and state-aid receipts. Staff said state aid disbursements were expected imminently and that a $12 million loan taken after the audit date was disclosed in the audit’s subsequent-events note; the loan’s term requires repayment by Aug. 29, 2025 and carries material interest expense estimated by staff at roughly $400,000–$500,000.

The board approved the audit and single-audit report by roll call (vote recorded as 7–0).

Why it matters: the district’s low general fund balance (below the state 5% warning threshold) triggers a required corrective‑action and multi‑year plan with the state; the material weakness is a repeat finding and requires management corrective action; the single-audit finding requires monitoring and a corrective action plan tied to federal grant rules. Several board members and staff said they would use the audit to inform the budget discussions scheduled for the coming week.

Quotes

“We audited the financial statements for the 06/30/2024 year end…we ended up with having a material weakness,” Amber Sutter, engagement partner, said.

“There is $1,800,000 that was submitted after the 60‑day mark; if that had been included it would have been revenue available to us,” a district finance staff member said, explaining the unavailable revenue classification.

Ending

The board accepted the audit 7–0 and asked staff to provide a supplemental update that projects the district’s position from June 30 through the present, including expected state-aid receipts and proposed payoff strategy for the $12 million loan. Auditors and staff provided a corrective‑action plan in the audit packet; the board will review those actions alongside the upcoming budget adoption process.