Auditor: Milan Area Schools to receive "clean" opinion; unassigned fund balance fell to about 7%

Raymond audit principal Dan Merritt told the Milan Area Schools Board of Education on Oct. 8 that the district—s financial statements for the year ended June 30, 2025, will receive an unmodified ("clean") opinion and that the district—s single-audit of federal grants is expected to receive an unmodified opinion.

Merritt said the audit work is essentially complete but that the formal single-audit issuance is pending federal guidance. He told the board the audit found no material misstatements, no material weaknesses and no significant deficiencies and described the result as a "squeaky clean audit." He also said the audit team reported one immaterial timing difference from the prior year tied to a legal settlement, which was corrected in the 2025 financial statements.

The audit presentation included several items the board will see detailed in the draft report. Merritt said the district adopted GASB 101 (compensated-absence accounting) in fiscal 2025; that change required restating the beginning net position and produced a restatement of about $2.7 million related to compensated absences. He explained that GASB 101 changes how accrued leave is measured and that the implementation required management to rework prior-year balances.

On operations and reserves, Merritt reported the district—s net OPEB (other postemployment benefits) asset increased while the net pension liability decreased, reflecting favorable experience in the statewide retirement systems. He said the district had roughly $1,500,000 in federal awards for the year (federal grants only), and Raymond selected the Child Nutrition cluster for single-audit testing and found no compliance findings.

Merritt cautioned that the district used about $1.5 million of fund balance during the year, leaving an unassigned general fund balance of roughly 7.2 percent; when including assigned amounts, the total fund balance was about 10.45 percent. He recommended rebuilding toward a 10–15 percent target (roughly two months of expenditures) to provide a cushion against revenue variability and to avoid putting pressure on collective bargaining and payroll commitments.

Board members and staff asked technical questions about days cash on hand, the impact of the sinking-fund receipts (for future audits), and which accounting pronouncements will require future work; Merritt said the next two GASB pronouncements will not impose significant new burdens on the district. The board did not take final action on the audit at the Oct. 8 meeting; Merritt said the final financial statements will be issued in the next few days and the single-audit will be issued after federal compliance guidance is released.

Quote attributable to a speaker in the record: "An unmodified opinion will be given very shortly on the 06/30/2025 financial statements," said Dan Merritt, audit principal, Raymond. Merritt also described the result as a "squeaky clean audit."