Alief ISD audit yields clean opinion; auditors report no findings and a $25.8 million increase in fund balance

Alief Independent School District officials and independent auditors told the districtaudit committee on Jan. 23 that Whitley Penn issued an unmodified opinion on the districtfinancial statements for the fiscal year ended Aug. 31, 2024, and identified no material weaknesses or significant deficiencies.

Lupe Garcia, partner at Whitley Penn, said during a presentation that "our audit of the district's financial statements for fiscal year 2024 did result in an unmodified opinion," commonly called a clean opinion, and that the firm found "no material weaknesses or significant deficiencies reported, nor did we identify any material noncompliance to the financial statement." That unmodified opinion, Garcia said, indicates the district followed generally accepted accounting principles and that its financial statements and note disclosures are fairly stated in all material respects.

The auditors also reported no findings in the federal single audit for the year. Garcia listed the district's three major federal programs for fiscal 2024 as the special education cluster, Title I and Title III and said the compliance testing identified no questioned costs or instances of noncompliance.

On the district's financial position, Garcia summarized key totals: total assets and outflows of resources of $1,200,000,000; cash and investments of $357,400,000; capital assets (net) of $651,800,000; liabilities and deferred inflows of $941,600,000; and a net position of $211,600,000 as of Aug. 31, 2024. The district reported general fund revenues of $466,600,000 and general fund expenditures of $442,100,000.

The auditors reported that general fund revenues and other sources exceeded expenditures by $25,800,000, producing an ending general fund balance of $164,100,000. Of that amount, the unassigned fund balance was $122,100,000, which the auditors noted represents 27.6% of general fund expenditures and exceeds the districtgoal to maintain at least 15% of operating expenditures.

Trustees asked auditors and district staff several follow-ups during the question-and-answer portion of the meeting. Trustee Keith asked how the district's net pension liability of $201,400,000 is calculated. Garcia explained that "the proportion is determined by the amount of contributions every employer makes to the plan" and that Whitley Penn applies that employer proportion to the statewide actuarial liability produced by the Teacher Retirement System of Texas (TRS). Garcia added that TRS is about 73% funded and that the measure is a statewide actuarial allocation rather than a district-specific promise or payment schedule.

Trustees also asked about internal controls and whether the district's purchasing system enforces approval workflows. Dr. Emily Littlefield, the district's chief financial officer, said the software routes purchase orders based on preset dollar thresholds and that budget codes are created centrally by the district finance office so "no one else has the authority to do that," which prevents unauthorized overrides.

Committee members pressed on why revenues exceeded expenditures for fiscal 2024. Garcia and district staff said several timing and one-time items contributed: significant federal assistance from ESSER funds, under-hiring that reduced payroll expenditures, prior-year property-value audit recoveries that were recordable in the fiscal year, and a late payment of roughly $5,000,000 that was accrued back to FY24 for accounting purposes. The auditors cautioned that some of those revenue items are one-time or timing-related and may not be recurring.

The audit team said it obtained a management representation letter and reported no disagreements with management over accounting principles or estimates. Garcia closed by noting the districtstaff "worked very hard" preparing the report and observed that Alief ISD is among a small number of Texas districts that can prepare their own financial statements in-house.

With no further questions, the audit committee adjourned at 5:05 p.m.