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ESD auditors say Vashon audit unfinished; $392,000 bond rebate was used temporarily to stabilize operations
Summary
Regional ESD consultants told the Vashon Island School District board the annual audit is incomplete and largely concerns statement classifications rather than missing cash; they disclosed a $392,000 qualified-bond rebate that was deposited into general fund during a transition and described options to reconcile it in next year’s levy or a transfer.
Regional Educational Service District consultants told the Vashon Island School District board on June 1 that the district’s fiscal-year audit is not yet complete and that the outstanding items are primarily accounting restatements rather than lost cash.
"The audit is not done," one consultant said, adding that auditors are reviewing revenue coding and financial notes. The consultants described the technical issue as a bookkeeping ‘‘statement’’ misclassification — where revenue was recorded in one account rather than another — and said auditors typically resolve such housekeeping items during exit interviews.
The consultants also described a qualified bond rebate tied to federal subsidy programs for school construction. "We ended up keeping about $392,000, which is one rebate payment in general fund for the 22–23 school year," the presenter said. That rebate, the consultants said, was deposited into the general fund during a transition in finance staff and was used to meet operating needs. They emphasized that bond principal and interest payments are current and that the district is not in default on bond obligations.
The presenters said the audit outcome will determine the district’s official ending fund balance and therefore the beginning balance available for the 2024–25 budget. "The audit will help us determine where we are at in the ending fund balance," one consultant said, noting that the district is effectively operating across multiple fiscal years (closing 22–23, running 23–24, and budgeting 24–25) and that audit timing affects projections and budget adoption.
Consultants outlined options to address the rebate treatment: restate the financials and move funds to debt service, levy the difference through a future levy rate adjustment, or transfer general-fund cash to debt service. They urged caution in projecting the 2024–25 beginning balance until the audit is finalized, saying premature estimates could require later corrections.
Board members asked for timelines and clarification on legal constraints. The consultants said they expect most audit work to be done soon and an exit interview possibly in July, but final state-auditor report timing can vary. They also reviewed federal reporting rules for grants (the SE/CA schedule) and noted the state auditor’s office may require precision in grant titles and CFDA references.
What happens next: consultants committed to provide updated financial projections and cash-flow analyses once audit items are resolved so the board can proceed with budget hearings later this month and a final budget hearing in July.
