The Pacific Grove Unified School District received an unmodified (clean) auditor’s opinion for its FY2023–24 financial statements, but auditors and district staff told the Board of Education that state compliance findings will reduce state apportionment and require internal changes.

An audit presentation by Ryan Zelensky, senior manager at Ibailey, said the district’s financial statements were clean but that several state compliance findings were reported. The largest single fiscal result was a penalty tied to insufficient documented instructional minutes at Pacific Grove High School; auditors calculated a related funding reduction of about $140,000.

The nut graf: While an unmodified opinion signals the district’s financial statements are reliable, board members focused on preventable operational problems that caused the state findings and the steps staff said they are taking to stop repeated errors.

Auditor highlights and board reaction

Zelensky said auditors issued a standard unmodified opinion on the main financial statements and that the audit included federal program testing and state compliance work. He told the board that the district’s statement of net position shows a large negative pension-related balance (about $32 million) resulting from required accounting for pension liabilities.

In reviewing compliance, Zelensky listed three findings in the audit report: mismatches between ADA (average daily attendance) documentation and reported figures, a shortage of instructional minutes at the high school (the $140,000 penalty), and an error in unduplicated pupil count that produced approximately $3,000 in disallowance.

“Those financial statements have been audited,” Zelensky said, then explained the instructional-minutes finding was tied to a scheduling change at the high school that included optional office hours during testing weeks.

Board members pressed staff on controls and asked for concrete systems to prevent recurrence. Trustee McNary said the district must “have systems in place so that we don’t end up in the same spot,” and Trustee McNary and others asked for a specific timeline and description of changes to review processes that verify minutes, ADA, and unduplicated pupil documentation.

Staff explanation and next steps

Assistant Superintendent Jordan told the board the high school master schedule exceeded required minutes overall, but the optional office hours recorded in the schedule were not mandatory and therefore could not be counted as instructional minutes during the audit. He said the schedule has already been revised so office hours will not create the same ambiguity in final exams and testing periods going forward.

Jordan and superintendent Adamson said the district has tightened internal review and will present the strengthened process and timing to the board. For the unduplicated pupil count finding, staff said some free-and-reduced meal applications contained incorrect information and that the district has added more rigorous packet checks and controls.

Board action and context

The board voted 5–0 to accept the audit report as presented. Trustees and the student representative also asked for a follow-up presentation that outlines the revised controls and milestone checks the district will use to prevent similar penalties in future audits.

Other audit notes

Zelensky reported the district issued a new bond series B in FY2023–24 (about $7 million) and that federal special-education testing produced no findings. He described the management discussion and notes sections of the report and explained why pension accounting produces a large negative net position on the statement of net position even when current operations are balanced.

Ending

District leaders said staff will return with a concrete plan and schedule for additional internal controls, and that corrective steps taken for the 2024–25 year (revising the testing-week schedule to remove non‑mandatory office hours) should prevent a repeat of the minutes finding. The board accepted the audit and asked staff to report back on implementation of the improved review procedures.