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Independent auditors give Merced City School District a clean opinion but cite two state compliance findings
Summary
iBailey presented an unmodified (clean) audit opinion for the district’s financial statements, flagged a $12 million increase to compensated absences under GASB changes and two state findings related to classroom teacher salary rules and LCFF reporting.
Mark Dew of audit firm iBailey told the Merced City School District Board that auditors issued an unmodified opinion on the district’s financial statements, the highest audit rating, and highlighted two state compliance findings.
Dew said a change from the Governmental Accounting Standards Board (GASB 101) expanded reporting of compensated absences to include sick leave, producing an approximately $12,000,000 increase in reported liabilities. The district also recorded a recent bond issuance that added roughly $43,000,000 to long‑term liabilities; government‑wide assets were reported around $540,000,000 with net position near $232,000,000.
On compliance testing, auditors reported no federal findings and no financial statement findings, but did cite two state findings: one for classroom teacher salary requirements (a common finding among California K‑12 districts) and one for the unduplicated pupil count used in the Local Control Funding Formula (LCFF) reporting, where some students were misclassified as free or reduced‑price meal status instead of paid. Dew noted a waiver process with the county office can address the teacher‑salary finding and that corrections to the CALPADS reporting would be required for the LCFF issue.
District staff and the auditor said the report and the accompanying management discussion and analysis provide the context trustees can use for fiscal planning; staff also noted available reserves meet state requirements.
