Ketchikan school board accepts FY24–25 audit; auditors flag $5.4M due-to-borough balance and student-activities deficiency

The Ketchikan Gateway Borough School District Board of Education voted 6–0 Wednesday to accept the district’s FY24–25 independent financial audit, after auditors described a clean opinion but flagged several issues for the board’s attention.

Grant Todd of Altman Rogers & Company told the board the firm issued an unmodified opinion on the district’s financial statements for the year ended June 30, 2025, meaning “the financial statements referred to above present fairly, in all material respects, the respective financial position of the district as of 06/30/2025.” Todd said the opinion is the best auditors can give and that the presentation addressed to the board reflected final numbers.

The audit shows a district-wide deficit in net position of about $15.6 million at June 30, 2025. Current assets were approximately $3.4 million, current liabilities $8.16 million (including an amount auditors identified as $5.4 million payable to the borough), and long-term liabilities roughly $28.4 million — the bulk of that tied to net pension liabilities. District expenses totaled about $53.6 million against revenues of roughly $53.4 million, producing a year-over-year decrease in net position of about $220,000.

Todd also noted the effect of recently implemented accounting standards, saying the district had to retroactively record compensated absences under GASB guidance, which reduced beginning net position and increased reported long‑term liabilities.

Auditors reported one significant deficiency in internal control related to the student activities fund. Todd said auditors tested a sample of 10 transactions and found adequate supporting documentation and evidence of review and approval missing for nine of them. Management is required to provide a corrective action plan that auditors will review next year.

Board members asked how the audit could be “clean” while the district showed a large balance due to the borough. Todd explained audit materiality and scope and described that much of the fluctuation in the due‑to‑borough balance related to health‑insurance internal service fund activity and timing of cash flows at the borough’s central treasury. He urged improved communication and monthly reconciliations between district and borough finance staffs.

The motion to accept the FY24–25 audit was made by member Jordan Tabb and seconded by Sherry Montgomery; the clerk called the roll and the motion passed 6–0.

The board will receive an amended budget at its Dec. 17 meeting and asked staff to prepare recommended budget transfers and fuller reporting for all funds. Auditors and staff offered to return in January to walk the board through additional detail as the borough completes its own audit.

What happens next: auditors will require the district to report progress on the corrective action plan for the student activities finding in next year’s audit. The board directed staff to work with borough finance on more timely monthly reconciliations and requested follow-up briefings in January.