Lakeville audit returns clean opinion; district posts $15.2 million improvement to fund balance

Independent auditors told the Lakeville Public School District board that the district's fiscal year 2024 financial statements are "unmodified" —'a clean opinion'— and that the audit uncovered a single internal-control finding in the food service fund. Auditor Nancy Scholtenberg said the finding was a year-end receivable related to state-paid meals that was adjusted during the audit, after which the financial statements were fairly stated.

The clean opinion is the headline from Bergen KTV's audit presentation to the board. "We are issuing an unmodified opinion, or a clean opinion," Scholtenberg said, adding that the firm follows government auditing standards and performs focused testing of federal programs when federal spending exceeds the $750,000 threshold.

Why it matters: a clean audit reduces external risk to the district's financial reputation, but the board also must monitor restricted and assigned balances and planned expenditures that will reduce the one-time surplus.

The financial details the auditors flagged included a larger-than-expected positive variance to budget: the district had forecast a modest increase in fund balance but outperformed that plan, producing about $15.2 million more in fund balance than anticipated. The audit presentation showed total revenues slightly above budget and expenditures about 5.0 percent under budget, driven in part by timing: a number of large items (a back‑loaded employee contract payment and significant curriculum purchases) were budgeted for FY24 but will be spent in FY25.

Bill Hominguez, the district's director of business services, said managers set aside approximately $3.6 million in assigned fund balance for the teacher contract (EML) and about $1.8 million for curriculum purchases that were deferred into the following fiscal year. Hominguez said staffing vacancies (custodial, technology and special-education positions), milder-than-normal winter costs and postponed curriculum purchases were the primary contributors to the one-time positive variance.

Special revenue funds: food service and community service The auditors noted a material audit adjustment in the food service fund, then reported that the district's food service revenues rose materially in FY24 because the state paid for student meals and participation increased. The food service fund balance grew about $1.3 million and is reported at roughly $4.5 million (more than 50 percent of that fund's annual expenditures). Board members cautioned that state rules limit what the food-service balance may be used for; the district could be required to spend these funds on eligible items or risk losing them if state policy changes (the board discussed a possible rollback from a six-month allowance to a three-month allowable balance).

Compliance and federal testing Scholtenberg said the firm performed federal single-audit procedures as required and issued an unmodified compliance opinion for the federal programs tested (child nutrition was selected). She told the board there were no federal compliance findings and no Minnesota legal‑compliance findings from state-auditor checks.

Fund balance and policy context Auditors and staff explained the composition of the $15.2 million improvement: assigned balances set aside for known future obligations, restricted balances required by statute or funding rules, and unassigned amounts that give the district operating flexibility. The district's unrestricted/unassigned fund balance increased to about $6.9 million (reported in the presentation as ~3.7 percent of expenditures), while an alternate metric presented in the audit shows an "unrestricted fund balance as a percentage of unrestricted expenditures" at 6.9 percent. The board's fund-balance policy calls for a minimum unassigned balance of 5 percent; auditors noted the district has improved but still sits below some large-metro comparators (the 20-largest-metro average shown in the slides was roughly 17 percent).

What the board will watch next Board members pressed staff on which savings were one-time (weather, vacancies, delayed purchases) and which reflect recurring changes; staff warned many of the large savings are not likely to repeat and some of the improved balances are already assigned to obligations in FY25. The auditors and finance director recommended continued attention to curriculum spending schedules, the EML contract carryover and food-service eligible expenditures so the district does not lose restricted funds.

The audit presentation and the full communication letter will be included in the district's annual report; staff said they are close to issuing the ACFR after final reviews. The board did not take formal action during the audit presentation. The auditors left the meeting after concluding their presentation and thanked district staff.