Wayzata audit: clean opinions, GASB 101 boosts compensated‑absence liability by about $20M

Jackie Heagle, partner in charge of the audit at LB Carlson, told the Wayzata Public School District board in a Nov. 24 work session that auditors issued a clean opinion on the district's basic financial statements for the year ended June 30, 2025, and identified no material weaknesses or instances of noncompliance in Minnesota legal compliance testing. "For the audit results over that district financial audit, clean opinion on that basic financial statement," Heagle said.

Heagle and district finance staff emphasized that federal single‑audit opinions have been delayed because the federal compliance supplement has not been released. "So all the federal audits are delayed," Heagle said, adding that the Minnesota Department of Education (MDE) has issued extensions through March and that the board will receive the federal‑awards schedule and related opinions when the supplement is published.

A principal change this year stems from implementation of GASB Statement No. 101 for compensated absences, which alters how vacation and sick‑leave liabilities are measured. Heagle said the new guidance requires reporting an estimated liability for anticipated use during employees' active service life rather than recording only potential retiree liabilities. "This liability went up about 20,000,000 based on these estimated valuations," she said, and the amount is shown in internal service fund reporting rather than the general fund's spendable balance.

District figures presented to the board showed year‑end cash and investments of about $86.3 million (an increase of roughly $10 million from the prior year) and a general fund balance of about $63.5 million (also up about $10 million). Heagle said general fund revenues closed near $228 million (about $13 million higher than the prior year), driven largely by enrollment‑related state funding increases and about $2.6 million in higher property tax collections tied to an approved levy.

She also reviewed fund breakdowns: nonspendable dollars (about $2.4 million), restricted funds (~$24.6 million, including capital levy and long‑term facility maintenance), assigned funds (just under $11.3 million), and approximately $25.1 million unassigned (around 11.4% of general fund expenditures), which Heagle said aligns with district fund‑balance policy.

On other funds, the food service fund closed at roughly $2.8 million and the community service fund at about $5.6 million. The district's self‑insured medical and dental internal funds showed a positive net position (about $4 million), while the early‑retirement/compensated‑absence accounting change produced a reported deficit in that internal service fund area (Heagle cited figures in the low‑ to mid‑$20 millions). She characterized the compensated‑absence figure as a change in accounting principle rather than an operating cash shortfall.

Board members asked clarifying questions about whether GASB 101 changes the general fund balance (staff said it affects internal service fund presentation but not the general fund's unassigned balance), purchase‑services timing that produced budget variances, and when statewide comparative data will be available. Heagle said statewide benchmarks for 2025 will not be published until 2026 and encouraged the board to review the management report when available.

The board thanked the finance team and auditor for the presentation. The district plans to present final audited financials for board approval at the December regular meeting, after members have had time to review the full audit report and the supplemental federal audit material when issued.