Audit shows financial stability but flags one budget-law variance; board hears explanations

Auditors on Thursday presented the Orleans Parish School Board’s fiscal year ended June 30, 2025 audit and told the board the district’s financial statements are materially correct but include a single repeat finding tied to a 5% variance under the Louisiana Local Government Budget Act.

The audit, delivered by Tiffany Dorsa of the contracted audit firm, found no material weaknesses and no instances of fraud that required reporting, Dorsa said. "We did not identify any potential or known fraud," she told the board, and noted that auditors identified one finding related to compliance with the Louisiana budget law because of timing-related audit adjustments from the prior year.

The finding stems from audit adjustments tied to FY2024 that could not be posted before budget amendments were required, Dorsa said. "State law requires a budget be amended when there is a negative variance in revenues or expenditures of 5% or more," she explained; the district’s late adjustments pushed a fund over that threshold. Dorsa and board members characterized the issue as timing-related rather than an ongoing practice of noncompliance.

Why it matters: repeated audit findings can trigger additional monitoring from state agencies and raise questions about fiscal controls at schools and central office; board members pressed auditors and staff about the scope and any ongoing risk to school budgets.

Key numbers and context: auditors reported the district’s total net position remained largely stable over five years at roughly $1.75 billion, with a slight year‑over‑year decrease. The auditors said restricted net position increased because more resources were constrained by external legal requirements, including transfers to the School Facilities Preservation program. The presentation noted the school facilities fund increased from about $156 million to $180 million year over year; unrestricted fund balances declined in part because of distributions to charter schools.

When board member Parker asked whether a $35 million transfer to charter schools explained the drop in unrestricted balances, Dorsa confirmed that approximately $35 million had been sent to charters but cautioned that multiple items affect the unrestricted balance. Parker also asked for the amounts paid to the Orleans Parish Assessor and the City of New Orleans; the auditor identified $10,000,000 to the assessor and $2,500,000 for sales-tax–related fees.

Management-letter recommendations and control items: auditors praised the district for resolving most prior findings (down from seven last year to one this year) and presented several best-practice recommendations. Those included tightening information‑technology controls (details were not disclosed in open session), updating ethics and investment policies to reflect current exposures (including the district’s LAMP investment amounts), improving segregation of duties for cash handling at school sites, ensuring subrecipient federal‑award audits are routed to grants staff, reviewing user controls for third‑party service organizations (SOC reports), and improving travel‑reimbursement and bank‑reconciliation processes.

District response: CFO Naisha Veal and Superintendent Fatima Fulmore credited the finance team’s work and a corrective‑action plan. Fulmore said the administration had inherited a near‑$50 million shortfall earlier in her tenure and had been working with auditors, outside consultants, and state reviewers. "We established our own corrective action plan," Fulmore said, and the district has increased real‑time communication with schools about revenues and monthly projection meetings using a local revenue‑estimating tool developed with outside advisors.

State oversight question: board members raised a Louisiana Department of Education letter that signaled additional monitoring. The auditors said their work covered the fiscal year through June 30, 2025, and that they were not aware of additional legal violations through that date. District staff said they are cooperating with the state and continuing to provide up‑to‑date AFR information as audits and revenue confirmations complete.

Next steps: auditors recommended that the board track progress on management‑letter items and require regular updates from management on corrective actions. Board members asked staff to confirm the status of responses to state inquiries and to continue monthly updates to schools and the board.

At the meeting’s close, the board thanked the audit team and finance staff for the work that reduced prior findings and for steps taken to stabilize district finances.