Audit: Roaring Fork general fund fell about $10 million in FY24; board warned to watch reserves

An independent audit presented to the Roaring Fork School District No. Re-1 Board of Education found the district began fiscal 2024 with about $27 million in its general fund but used roughly $10 million during the year, leaving the district with about $16.8 million in unrestricted general-fund balance.

“The general fund is the primary fund that the operations of the district fall under. The district started the year with $27,000,000…and last year, 10,000,000 of that fund balance was used. So that drops you down to 16,800,000,” Paul Bachus, a CPA with McMahon & Associates, told the board during the audit presentation.

Why it matters: The district remains above its stated minimum reserve but is much closer to that floor than in prior years. Bachus and district finance staff said the decline was driven mainly by higher-than-expected health-insurance costs and capital spending. The board was told to expect additional budget decisions and a supplemental budget request at the Jan. 29 board meeting.

The nut graf: An auditor—s unmodified opinion confirmed the FY24 financial statements are reliable, but the report highlighted two issues that could affect future budgets: a large draw on reserves and a cluster of operational weaknesses auditors recommended the district address. The board was urged to monitor fund balance and quarterly results closely as the district completes supplemental budgeting for 2024–25.

What auditors found and recommended

Bachus highlighted that the audit produced an unmodified opinion — the standard clean report — but he flagged items the board should know. Those included: a roughly $10 million reduction in the general-fund balance, two duplicate payments identified during audit procedures (one discovered and corrected by staff, one identified by auditors), and a correction moving roughly $800,000 of BOCES expenses into FY24 because the related services occurred in that fiscal year.

Bachus also noted internal-control findings: activity funds and certain accounts-payable duties are not fully segregated; human-resources files were missing some employee forms such as W-4s; and several funds exceeded budget totals as presented to the board. He warned the Colorado Department of Education will review districts— audited statements and financial ratios and that the recent fund-balance drawdown could prompt further review.

Christy Chicoine, the district—s chief financial officer, told the board staff will respond in writing to the auditor—s letter and that a formal response is expected at the next board meeting. Chicoine said the district has already begun steps to tighten internal controls, automate some reconciliations and accelerate quarterly reporting to the board.

"We—re trying to be thoughtful about the use of fund balance as a near-term tool while we correct structural issues in future budgets," Chicoine said.

Quarterly financial update: health insurance biggest near-term pressure

At the same meeting Chicoine presented the district—s Q1 (through Sept. 30) financial snapshot and estimated the full-year reduction in fund balance would be about $5.27 million (compared with a budgeted reduction of about $2.0 million). That projection, combined with the FY24 ending balance Bachus reported, left the district close to — and in some scenarios below — its minimum-policy fund balance.

Chicoine identified three primary drivers of the increased pressure: a projected $3.3 million health-insurance overage in 2024–25, enrollment declines that lowered state equalization funding by roughly $721,000 for 77 fewer students, and other operational cost variances. Meadowood construction savings (about $3 million under budget) and one-time revenue sources helped offset part of the pressure, she said.

"As of this point, the available state loan is $15,000,000, and we haven't borrowed anything as of end of September," Chicoine said, describing the state short-term borrowing option the district can access if needed. She told the board staff will propose a supplemental budget at the Jan. 29 meeting to address identified gaps and that the finance team is aiming to deliver more timely quarterly reporting going forward.

Board follow-up and next steps

The auditor recommended the board require quarterly financial reporting be posted under the district—s fiscal-transparency page; Bachus noted the district had posted only one quarterly report the prior year. Chicoine said staff will provide the auditor—s written-response letter at the Jan. 29 meeting and that she expects to produce the Q2 financials for the board in early February to establish a recurring cycle of reporting.

What the audit does not say

Bachus emphasized auditors report on historic results (what happened through June 30, 2024) and do not certify prospective budget projections. He said boards and management must separately assess forward-looking budgets and proposed reductions.

Ending

Auditors began filing required reports with state and federal agencies after the presentation. Board members asked for more frequent, clearer quarterly reports and asked staff to return with the written responses to audit recommendations and a detailed supplemental-budget proposal at the next meeting.