External audit: EMS ISD ends 2023–24 with $77.8M fund balance; auditor amends report to disclose $4.99M interim arbitrage estimate

The district’s external auditor, Carl Deaton, presented the Eagle Mountain Saginaw ISD audited financial statements for the year ended Aug. 31, 2024 at the Jan. 21 board meeting and highlighted results across major funds.

Key audited figures: Deaton said the general fund increased by $4.6 million in 2023–24 to an ending balance of $77.8 million. After accounting for the $15 million the board had earmarked for use in the 2024–25 budget, Deaton said the unassigned fund balance was $57.8 million — roughly 85 days of prior-year spending — which aligns with budget projections. He told trustees that the district’s capital projects fund reflected activity from a $150 million bond sale, $119 million in expenditures and $221 million in unspent proceeds and interest earnings at year-end as presented in the statements.

Child nutrition and enterprise funds: Deaton noted the child nutrition fund spent down some reserves — a net decrease of about $681,000 — after nearly $2 million in equipment purchases the prior year and transfers of allowable indirect costs. The employee childcare enterprise fund showed a profit driven primarily by the final tranche of federal COVID-related funds recorded as federal revenue in the year.

Property taxes and collections: The auditor reported the district assessed roughly $183 million in property taxes for the year and had a collection rate of 99.82%, leaving approximately $1.8 million in delinquent taxes recorded by the audit.

Arbitrage disclosure amendment: Deaton said a rebate analysis performed as of Aug. 31, 2024 showed an interim estimated arbitrage rebate liability of $4,987,057 related to a 2022 bond series. He said the figure is a disclosure at the two-year point and not an immediate payable; the amount could be mitigated or eliminated if district spending meets the exceptions or if proceeds are spent promptly before the five‑year review points. The auditor said the report before the board would be corrected to include that disclosure and that the board approved the audit as amended.

Why it matters: The audit shows the district finishing the fiscal year with sizable fund balances but flagged that a portion of those balances have been earmarked by the board for current-year operations and that bond‑related arbitrage analysis produced a contingent number that must be disclosed and monitored.

Next steps and board action: Trustees discussed arbitrage mechanics and asked staff about steps to mitigate potential future payments. The board voted to approve the audit report as amended to include the arbitrage disclosure.