##VIDEO ID:dcAxgiccZzQ## I just want to check in y to see of John Paul if you can hear me I know that he's on I can see that he's muted but there he is I can hear you not sure if I'm revved up but still ready to present so you're rubbed up for an auditor that's good enough yeah fair enough that's that's above the below so all right good morning John Paul if you want to introduce yourself to the members and then we can get started sure and I'm also sharing my screen if you're able to see that um again my name is John Paul laler with clion Larson Allen or CLA we the external financial statement Auditors and have been for um a number of years at this point um so I'm going to be presenting the results of the annual comprehensive financial report or the Acer um as well as the single audit which is included uh at the end of the Acer file itself um and so just to kind of kick things off um if you've been on the finance and audit committee or um seeing the board presentation you're going to be familiar with this um but just wanted to briefly kind of cover what we're uh responsible for um under generally accepted auditing standards basically what we're responsible for is reviewing the financial information that the district has presented uh making sure that it's without material misstatement or error that all the required uh disclosures are included and that the financial statements are set up the way that it should be I've used this um example before but essentially the district is the author of the financial statements and we would be the editor double-checking to make sure that everything's presented the way that it should that all the amounts are are um included the way that they should be couple of uh key things in here is that we do consider the internal controls and that's um a pretty significant part of our audit procedures making sure that that structure is in place in a way that um would lead to those uh Financial results being presented accurately but we're not specifically issuing an opinion over the effectiveness of those internal controls um we do review to see that if there's any potential misstatements due to fraud but that's not a the significant focus of the audit so if we were specifically reviewing for fraud there'd be a very different set of audit procedures that we would be performing um and then we're looking for reasonable but not absolute Assurance so basically we didn't review absolutely every transaction that the district had um again it was focused on those internal controls statistical sampling um kind of other meth methodologies to make sure that um the amounts are reasonably uh presented as materially correct one other thing that I wanted to point out is that um our audit really is focused on making sure that what's presented is accurate what we don't uh is um issue our opinion on is whether that's necessarily good or bad um in fact really the only Bas line that we have for um the audit is in terms of whether something's good or bad is just if there's an ability for the district to continue uh for the you know reasonable foreseeable future generally you know a year or more um into the future which is obviously a very low bar and something that I don't think anyone has concerns with the district shutting down uh within you know the next 12 months so it's a pretty low bar that we're looking at in terms of kind of performance yes or no really what we are looking to do is make sure that the information is accurate that way the board um as well as the um Bond rating uh agencies um citizens you know Etc any kind of stakeholders uh for the district are able to rely on the financial information as being accurate okay so with that out of the way kind of moving into the scope of the audit uh so first we have the financial statement audit which takes up the vast majority of the um AER the pages of the Acer I'm pleased to be able to say that we did Issue what what is referred to as an unmodified uh opinion also informally referred to as a clean audit opinion and so what that means is if we go back to what the purpose and scope of the audit was if that's making sure that everything's materially correct um our opinion is stating that after all of our audit procedures we do believe that uh the financial statements are materially correct that there's nothing in there that we believe is out of line with the way that it should be um and so we'll go uh a couple uh slides on some uh charts to look at some you know broad Strokes of how the uh financial statements uh shake out compared to previous years but overall um unless there's any questions comments or kind of discussion um that anyone on the committee would like to have relating to the financial information it's going to be pretty light on that I saw some of the things that were um it looks like there's a discussion uh later on in the agenda relating to fund balance we do have a couple of slides looking at that um which maybe will give a little bit of a framework for um kind of that future discussion in terms of the single audit that's the um required audit uh required by the federal government to review the different Federal Awards this is something that the district uh has every single year and it's required for any receiving over a million dollar in federal Awards so the district received uh during fiscal year 2024 little less than 50 million in federal Awards so that was required um we're pleased to be able to say that we did not have any findings as part of the single audit um which is um you know a a truly a feat to be able to do there's a lot of audit procedures specifically designed around looking at the single audit um it's very black and white from a statistical sampling uh methodology and so that's looking you know we'll select a random sample based on um the guidance that the federal government provides and if something is off or doesn't have the internal controls the approvals things like that that it needs to even if it was you know a $3 transaction that got sampled that shows as a finding um within the single audit section so um that's very black and white it's it less on that kind of material reality uh that the financial statement audit has this is much more yes or no in terms of the single audit um so we'll cover that in just a little bit more detail as well and then in terms of findings and recommendations we did not have any material weaknesses or significant deficiencies those would be included within the audit report within the actual PDF if there were any of those so we're pleased to be able to say that there were not any we did have a couple of it recommendations all of those being really more best practice recommendation so nothing reaching that level of significance for a material weakness or a significant deficiency okay so like I mentioned we'll move uh a couple slides on uh some charts with the financial uh results uh this first one um and I'll try not to get too much into the details of U the governmental accounting which covers school districts um but the district net position which would be the district's Equity so basically assets minus liabilities that uh net position includes the long-term items such as capital assets like the school buildings it also includes the net pension liability uh relating to Pera um and also includes the uh District's bonds and other uh long-term liabilities so if we look here we can see that they're um the the chart is upside down because uh the district's net position is negative and has been for the last five plus years um we'll see in a moment and if you've looked at the financial statements recently you probably remember this is due to the net pension liability that's required to be presented uh for the district so if we look here at kind of the 10-year um uh graph of kind of the net pension liability and what's been presented if we look for fiscal year 2024 the net pension liability was just a little less than 800 million compared to the um negative net position that's a little over negative 100 million so really that would be a positive number except for the net pension liability uh that net pension liability uh if you remember is basically the actuar calculated liability going out into the future of how much the deficit that perah has relating to the school division trust fund this is not a liability that's going to be due anytime soon um it's not something that the district could pay off even if you did have you know $800 million sitting around that you wanted to give to Pera um so it's really kind of more of a very long-term uh Focus liability basically saying that without additional contribu tions either by the state or by the district or adjustments to um the uh benefits provided to retirees or kind of other uh factors that the pension fund is not going to uh last without some of those changes again nothing um per does an analysis looking out the next 30 Years so they don't believe that there's going to be any issues in the next 30 Years but if you extend it out basically into to perpetuity that they do believe that this would eventually run out and need to be adjusted so uh kind of the longer winded explanation of the net pension liability but that's why the net position is shown as a negative amount and you'll notice the significant uh pension liability on the district's financial statements um much less significant but also relating to perah is the net OPB liability OPB stands for other post-employment benefits um provides a healthc care premium subsidy that's uh part of the benefits provided to retirees um that's considered really most people would look at it as part of the pension plan um but under accounting standards that is viewed uh separately and so that does get presented on a separate line um the amount is uh for fiscal year 2024 um a little less than $20 million so not anywhere close to as significant as the net pension liability but because most people don't throw around the word OPB all the time I have a slide on it here just so that if you're looking at the financial statements you know what that includes uh looking at the fund balance um here you can see that uh fund balance in fiscal year 2024 did uh increase from the previous um couple of years uh and so the fund balance would be the equity so again assets minus liabilities but this is on a current basis basic basically similar to the bases that you would budget for so that excludes uh buildings uh bonds that net pension liability those uh items would not be included within the assets and liabilities obviously like the principal payments that are due on the bonds those would be included as expenditures if there's payments for uh construction renovation those types of things those are included as expenditures which would be reducing this fund balance and so if you see the two different colors uh the darker shade is um the fund balance excluding the building fund which is the uh kind of lighter Greener shade um that building fund is um almost entirely um Bond proceeds and so if you see in fiscal year uh 2020 that there is there's a decrease to fiscal year 2021 in the uh fund balance but that's really relating to that green uh part of the shading decreasing which would be a spending down of the bond proceeds which would be you know required to be spent within a couple of years after issuance and really would be an expected decrease so the darker shade showing that that's gradually increasing would be showing that excluding those Bond proceeds there is uh a gradual strengthening of the district's overall financial position at least from an absolute dollar perspective over the last five years um so one other thing that I did want to show which I think is maybe a little interesting um is the fund balance as a as a percentage of expenditures so if you were to consider uh the remaining fund balance again that's assets minus liabilities compared to expenditures um as a percentage and for this uh chart I'm excluding the bill building fund as well as capital outlays so if you kind of exclude those debt proceeds and any of the capital outlays that can go up or down um each year depending on what capital projects are ongoing this would basically be showing how much of the expenditures for the fiscal year the district would be able to uh afford without having any additional uh Revenue come in so basically if we look at this for fiscal year 2024 that would say that if in fiscal year 2025 expenditures were roughly the same amount the district would be able to go almost halfway through the year um before running out of funds without you know having any additional revenues obviously that's not a situation that's going to happen the district is going to be receiving revenues but it's a generally a good measure of kind of how much is being stored in reserves um and so that's going to be showing a stronger financial position and sometimes again looking at just the um dollars in fund balance can be kind of a hard gauge of well did your expenditures go up pretty significantly was there a change in the uh cost for um salaries and benefits things like that that would um really show that the district is in not as strong of a financial position but again this U percentage might show um you know be an additional kind of piece of the puzzle when you're looking at assessing the district's financial position so that's all of the um information kind of financial statement results wise any questions or comments before we get into the IT recommendations um and the single audit results no questions for me all right sounds great I we'll continue on um yeah just making sure that you know I wasn't on mute for the last you know 10 minutes or whatnot so heard you yeah no it's sounds great I get you know it's uh most of this is you know good news and not anything overly you know concerning or anything like that so understand that um maybe there's not too much to ask questions or discuss okay so looking at the it recommendations um I did want to point out that there was a new auditing standard that was required to be implemented for fiscal year 2024 that auditing standard would change the uh required procedures that we have to go through um it's actually applicable not just to uh governments but really every audit performed in the United States um and that increases the scope relating to it systems um I will say that this is still a relatively um you know shallow review there's a lot that can be gone into for cyber security and disaster recovery and kind of all of that U you know in a lot more detail but it is something that we were required to review a little bit more thoroughly than we have in the past and so from that review we did have some recommendations relating to it policies cyber security um testing of backups for the disaster recovery plan that the district has um so those were you know again just big picture some of the things that we were discussing with them and had some recommendations um none of these were significant enough to show up in the um the communication for the audit results either within the audit report or in our governance communication so kind of the formal letter that goes to the board at the end of the audit um but it is something that we're bringing up just as um you know if if the District staff mentions that they have some um it changes that they're making relating to audit recommendations um and you say hey I thought we didn't have any findings or whatnot um you know just in FYI that this was something that was discussed but again more of the best practice recommendation than a an audit finding okay so moving to the single audit results again this is the audit over Federal Awards uh the district received approximately 48.7 million um in federal awards for fiscal year 2024 um major programs would be uh what programs we were specifically testing so the federal government has uh kind of a rotating um uh program over every three years that Awards over a specified dollar amount and kind of threshold would be tested and so for fiscal year 2024 we did look at the special education uh cluster or the idea program as well as the emergency connectivity fund uh which was used by the district uh primarily to purchase uh a number of Chromebooks for uh students and faculty U so those were the two programs that we looked at there's uh basically the federal government says almost exactly how they want these uh programs to be tested uh and so with that we follow all of the um procedures that they lay out and we're again pleased to be able to report that there were no findings or uh question costs so basically no issues that were detected as a result of this single audit okay so to wrap things up again I mentioned that there is a formal letter that's distributed to the board at the end of the audit um these this slide and the next one just kind of summarizes the key points from that um if there is basically anything significant that came up during the audit it would be reported in this letter even if it doesn't show up directly within the audit report itself um so there were no significant changes in accounting policies or accounting estimates no new um governmental accounting standards that were required to be implemented um there were also no uncorrected or corrected misstatements um and so would be as we issue our audit report we're saying that we believe that the financial statements are materially correct but if during the audit process we may have um adjustments that need to be made based on our audit procedures if we did have any of those that went into the financial statements uh to kind of get us to the point where we could issue that a clean audit opinion those would be listed here um but kudos to the district for not uh having any required adjustments to get to that clean audit opinion um and so really the clean audit opinion is something that um most governments should be expecting to receive um a lot of them will have to go through a number of adjustments and you know find things that are corrected and uh during the audit process um but Kudos again to the district for a very clean audit so basically nothing being presented here means that everything that was uh presented to us was materially correct um and that all the district's records were in order uh and well organized uh when we received it um the last thing that I'll point out from this one is just that um the district does have what we refer to as a group financial statement uh which means that the charter schools within the district are included obviously they have their own separate governing board and separate management um but they are included as part of what the district has oversight over those are presented within separate columns so the charter schools would not be included in those graphs that we were looking at uh earlier but you will see their financial information included within there and so with that again kudos to the district for a very clean and smooth audit for this year um I'll open it up again if there's any questions comments or discussion items hi Jean Paul and Erin this is probably more of a question for you um with regard to the it recommendations on cyber security and such is there any concern or um things to worry about budget-wise like is it going to be a significant expenditure or anything like that so we'll we'll go into probably an executive session and talk a lot with the board and more detail but what I would say is what I would say is the the biggest point of emphasis is going to be on on policies and procedures and and testing those procedures so it isn't as a we're not doing a lot of these things is that we need to make sure that we're documenting the overall process and that we're following that process where we continue to utilize I would say as best as possible the top-of-the-line defenses that we have I I call one of our folks he sits in a dark room that I never get to see him and he's the one you know these guys are really doing a good job of fighting defenses we we will actually present this to the we actually did already present this to Moody and SNP and we'll we'll present this to due diligence and bond tomorrow and in essence I think Kelly to answer your question is no don't believe that at the moment it's going to drastically change our budget it will change the amount of the amount of time we need to spend on documenting processes ensuring those processes aligned to U kind of what we've been doing you know we do things and then they're not always written down gotcha that makes sense appreciate the answer there sir thank you y and from our side working with John Paul these years has been fantastic we have been with CLA for quite some time different we have which different signing what would you call it John Paul signing we use the word you know engagement leader or audit leader um but partner principle would be what most people would uh call it yeah and so what that allows us to do is ensure that we have continuity among among the Auditors which is is now more of the best practice that the jfa the government Finance Officers Association has put out that it's more likely that we should be staying with the audit firm and then switching partners are switching uh reviewers on somewhere around a five-year basis what I would also say is maybe John Paul can you touch on quickly the the review process so it isn't just you looking at it and you signing off as as partner but the the quality control quality assurance review that happens before this was signed off on do you want to talk a little bit about that sure um so really the process that we go through um as much as I know some of the governments that we have and kind of what Aaron just mentioned with the it policies and procedures is that it's never enough to just do something uh for the audit you also have to document that it was done and frequently have someone else double check that you documented that it was done so it can feel kind of a redundant process but that's to make sure that you know if something is important that it's actually being done and that it's being double checked we take the same uh process for our audit workpapers and so that would be uh done by an individual within the audit team and then reviewed by myself and then at the end of the audit we have someone from um another office that's uh unassociated with our group that kind of takes their independent review of our audit workpapers making sure that um you know we did everything that we need to do if there's any um changes you know there's no material accounts that we missed there's no new accounting standards uh things like that that we overlooked so they kind of do their double check uh as well then John Paul can you talk about the peer review that happens that's required to happen between kind of audit firms that every I can't remember how many years every so many years three years um is required to be done so um basically everything just continues to be reviewed and then reviewed again we also have an internal inspection process um where another set of independent reviewers will select a sample of audits throughout the entire firm and review those making sure that in every um audit leader uh is selected at a minimum every three years during that process um and then um there's a peer review and so that's still internal at CLA and then every three years there's a peer review process where another firm will come in and review uh a sample of what CLA has done and make sure that everything meets those standards so really it's just review upon review upon review but the intent is to make sure that uh things are being done um as they should be in terms of the audit processes that we have Auditors need to be audited and then those Auditors need to be audited exactly somebody needs to get paid so I do want to make sure everyone had a chance to ask any questions before we move forward again I want to thank John Paul for for his work and his dedication we always have something that always falls off um the schedule of being a perfectly timed audit and I think John Paul and I have we're always trying to to make things more efficient in our process and so I look forward to the next one so thank you John Paul thank you John Paul and congratulations to Adams 12 on the clean audit absolutely thank you so now we're going to turn to sort of fun now we're going to turn into how do we pick our Auditors and what is required by our what's required by board and board policy that is one of the first pieces and then as we go through our general pro our purchasing process and our procurement process we have rules that we have to follow around procurement process that our board policy driven as well as statutory and regulatory requirements around purchasing and procurement and then we have the requirement of the board to go through as this policy states the competitive bid process and we'll talk about how that happens and I'll turn this mostly over to Brenda and we'll talk about the the last time that we did go out for RFP the length of the current contract with CLA and then the requirements as we move forward under the policies rinda thank you Erin good morning my name is Brenda McGee I'm the director of Supply Chain management I apologize for my creaky voice this morning um hopefully you can understand what I'm saying um we did select um CLA under an RFP back in 21 um per board policy anything over um $100,000 has to be formally solicited so um an RFP was run at that that time to select a um candidate to be our auditor um CLA was that candidate so we have been under contract with them um from the start of that RFP so we are currently in the last year of the contract with CLA um the contract that we have now will be for work performed in June through October of 25 so in the fall we will be looking at uh running a new solicitation for um to select a new audit firm potentially it could be CLA there's nothing that bars them u based on policy from resubmitting a proposal to be our auditor so they can be reselected um we have had them as Erin said for an extended time but um we just have to competitively bid that Adams 12 uses a website called bidet to post all of our solicitations and most of our vendors are familiar with that we also have the ability to do what we call a courtesy email when we post those solicitations that if we have firms that we know um potentially could be interested in the solicitation we can make sure that they are notified that the posting is out on bidet so we do try to get that out um to all potential biders sometimes Auditors aren't necessarily tied to bid that so when we know that we have companies that potentially could bid we we try to do those courtesy emails to make sure that they are notified so we'll be running that process in the fall but currently we are under contract with CLA um to perform our audit um from June to October 25 of the FY 25 um books um the amendments to the contract get a little confusing because the extension says that we're in this fiscal year but we're actually auditing the previous year so it gets a little um crazy when you're trying to look at it and make sure that you're covered so um that's a little bit about how we um go about selecting Auditors and the fact that we do this every five years um and we also set them up with contracts based on Taber and everything else our contract reads an award for one year with a potential of fouryear renewal so that contract can be extended each year it has not a guaranteed five-year contract so any questions for me on that process I was just curious what what is your bis year is it a calendar year no fiscal year goes July 1 to June 30 State fiscal year okay yes sir the best because we have the counties who are under the calendar fiscal year we are under the same fiscal year as the state because the state forced us to be and then we also have the federal fiscal year which ends on September 30th and begins on October 1st of every year so when we start looking at government governmental funds and federal funds awards that John Paul talked about you know we are on the federal fiscal year as far as knowing how much money we might receive so it's it's really a strange mix but certainly the district is on the same as same fiscal years the state the the procurement policy that dictates what we're going to do as far as when we have to bid is policy number 3320 um so that gives us our rules for um engagement so to speak on how we have to do the solicitation to select the vendor Aon anything else that you can think of on this topic we just mention here as well that the Auditors work for the board Auditors don't work for me they report to the board they report out to the board and the board ultimately would be the one who's approving the contract with the Auditors so we're certainly the ones making those recommendations and and informing the board of what current best practices are that they don't they don't report to me [Music] they don't work for me so it's always to have that that relationship and I I think that relationship's been very good as far as as John Paul stated I want to brag for just a second that having the clean opinion that we had this year which meant Not only was there a clean opinion on the overall financial statements but also on the single audit which is controls around the spending of federal Awards and if you ever want to fall asleep you can read the OM supplement that's required to be followed on the audit and I can't remember how many pages is but it's pushing about 2,000 Pages now at least no it's got to be more than that and then the next piece that John Paul mentioned is we also have have you know different levels of of findings but the last even the last bit of findings would be just those shared with the board in a management letter and those would be audit adjustments whether those were immaterial so the Auditors passed on those adjustments or they required us to make those adjustments but they were not significant enough to be stated in the in the in the financial statements themselves as we presented this to the board Chris noted I noted John Paul had mentioned that it is not common to have that level of of a an audit so I would say that um I'm very I'm very glad that that we were able to reach that standard it I have not been a part an audit in since 1995 1993 that has really received that level of of cleanness across the entire piece and as Chris mentioned neither is he so we're very happy on on the results overall of the audit so that was me breaking my arm patting myself on the back well deserved kudos very gracefully very graceful thank you Brenda I'm not sure if you're if you have more to present but I was just curious um thank you for explaining the bid process have there been any rfps this year or do you anticipate any coming up outside of the SE the Auditors um there's been a lot of rfps Kelly um because uh the bond passed we were already being proactive with trying to get solicitations on the street for our major projects that were scheduled in the bond for summer of 2025 uh the biggest project being um the replacement of Thorton High School um so we were being proactive and putting solicitations on the street to try and get Architects um owner reps um cmgc which is the construction part on those and we probably have have about um 10 active solicitations right now on the street most of those related to bond um with different things like parking lots and some interior door Renovations like I said the Thorton project is huge um so those are the major projects that we have going on right now and those are all being handled through an RFP process and like I said I think there's about 10 of them right now excellent sounds like you guys were prepped and ready um we were trying to be very proactive particularly with um Thorton high school we know that other school districts passed bonds as well and so we're trying to um get these out there and get contractors under contract before everybody else does um you know there's a small vendor pool for all of these different positions and so trying to be proactive and get uh good contractors under under contract and uh have our bond items um maybe Trump other Bond items from schools that are out there as well so was trying to be proactive and and get to a pool of vendors and get them under contract because we know the work is going to be crazy in summer of 25 and last question are you are you getting good responses like a lot of participation in bids competitive bids um we are I have been pleasantly surprised um I think the four that I am currently running or trying to comp uh finish up I have received anywhere from um I think the one I'm reviewing right now I have five or excuse me nine responses so I definitely was pleasantly surprised with those and getting that information we're getting a good response we get good turnouts at the site walkthroughs so I think these uh contractors are looking to set up their work for the summer and get everything planned out so yes we are getting some good response and again that is done through bidnet and we have reached out with that courtesy email that I mentioned to a few contractors but let's say on the the one that I'm working on right now um I have nine responses and I think my courtesy email only went to like four so they are checking those and and they are being proactive and looking at bidet and getting that information excellent excellent glad to hear it and just a side note on bidnet um a contractor has to sign up for bidnet um it's free to sign up if they want to do what's called a push notice I think there is a slight fee for that maybe 20 30 bucks I can't remember um but what that does is they select a commodity that they are part of like the construction World um and I say commodity codes that's relative to the procurement world and most people don't know what commodity codes are um but they can select their commodity codes and then when any um agency that uses bidet post bid out there that hits their commodity code it sends them a push notice and says hey Adams 12 or maybe Boulder Valley or whomever has just posted a bid you may be interested in go take a look so I think the vendor ERS are being more proactive as well and um like I said I have been pleasantly um surprised and um hopeful to see these um my evaluation committees may not be so happy to see nine um solicitations that they have to review and score um but I think it's good for us and um making sure that we're getting out there and getting that vendor pull that we need to um utilize for sure the more options you have the better solicitations and um opportunity you have for cost savings absolutely any other questions for me relative to soliciting or the Auditors um selection process or anything else last thing Brenda just go Broncos you kind of noticed I was not wearing proper business attire oh I think it's very appropriate with the Sunday night game I'm I'm uh I'm happy to see it well I have a site walk through later sorry Thursday night game I said Sunday I me Thursday sorry I have a walkth through a site walkth through for another project um at 11: today so typically when I'm out in the schools and walking around the parking lots in the schools I wear jeans so I thought hey what the heck I'm gonna throw on the Broncos to go with it perfect all right Arin I think I'll turn it back to you thank you so much thanks Brenda thank you Brenda um now we get to turn to what I would say is both the end of the story and the beginning of the story and that is fun balance and so we have a little presentation here that I'll share me get that pulled up I was find being in Google personaliz CHS versus in U power point it's always hard for me to figure out how it always is supposed to work so I will cheat and let bring it down into PowerPoint also share my screen here and I would say that um this a relatively short presentation as far as the number of slides but I think it can be also a bit of a a robust conversation if there are are questions and I know Mike you had asked these questions last year and and so I think it's we'll go into this in a little bit more detail and I want to make sure I'm covering those pieces that we want to talk about so first we want to just talk about overall just what is what is fund balance the components what's what are I think the overall benefits of of fund balance are the right amount or the desired levels and what and we'll take a look at those those things most of which is anecdotal was fund balance it is since the beginning of the school district the accumulation of operating surpluses what's in operating Surplus it's the difference between revenues and expenditures and that is just overtime how is the district done relative to actual remember this is in this particular piece this is actuals if we talk about actual revenues versus actual expenditures and then we also have the budgeted side which is the budgeted level of revenues than the budgeted level of expenditures so what is the overall amount that's left when we have revenues and and expenditures so from the beginning of the school district so we're almost the 75th anniversary of the school district so over the last 75 years what has been the accumulation if you added up all the revenues of the school district in 75 years added up all the EXP endures within 75 years subtracted those two numbers that is our fund balance right so it's a I'm glad I don't have to do that because it just rolls year over year so what then is the overall fund balance is what's left also after you think about all of our assets and all of our liabilities what is left and in this particular instance when we talk about fund balance in this instance assets do not include our buildings they do not include any of our our fixed assets or our equipment and what John Paul was showing our fund balance also does not include the OPB or pension liability those show up on a whole different set of books when we talk about overall fund balance we're talking about how the governmental funds work so we could be talking about how the general fund Works how the bond Redemption fund Works how each of our individual funds work but this is not assets Li versus liabilities in kind of the long-term sense this is generally current assets minus current liabilities it's not 100% true but it's pretty close to Accurate as to the types of assets the district has so here we're talking about cash as the primary asset that the district has in in the governmental funds and we can we'll look at at the financial statements over overall here in a second but when we look at when we look at those fund balances we are just looking at the the funds themselves as opposed to I don't know how how else I guess to say it other than I'll show you in a moment and hope that makes a little bit more sense hey Erin um I'm by no means an accounting person at all but neither am I is that is that normal to not include your buildings and such or is it is is it truly putting it down to like liquid assets I I I'm just trying to wrap my brain around that so I'm gonna transfer it over to our actual audit because I do think that that's going to help this conversation of course I got to remember the best way to find the one I'm looking for go go okay I'm me to make this is a little bit wider so makes it U makes sense here okay so when we look here at the basic financials of the district this district has a statement of net position which is what anyone who is a normal person would consider a balance sheet and that is where we're going to see ass that's where we're going to see those assets that I I talked about but when we talk about the governmental funds then it's a little bit different as the type of piece that we're looking at I think the way that gby shows it is it says that statement of net position and statement of activities makes this more comparable to Private Industry so when we look at and here we're only going to be looking at this First Column the component units then would be the charter schools hopefully you can see my screen can you see my screen can you see the yesal statements okay y so you'll see here even on this particular presentation of the balance sheet we would always start with the amount that's most liquid to the amount that's the least liquid or the amount that's most current versus the amount that is most um I would say non-current so here we would start with with a normal balance sheet your cash your receivables your inventory other every financial statement has other what is other it's other and then you would have Capital assets being not being depreciated there are two types for the school district the first one is land land does not depreciate so that is would be the overall cost of our land from when it was first purchased and the other thing that is not being depreciated is an asset that we're currently building you could say Construction in in process or Construction in progress It's just limited to CIP and then everything else would be the capital assets net of accumulated depreciation and when you look at those assets we're a one we have $1 billion dollar worth of assets which is exactly what we would expect but remember that the buildings are net of depreciation so you know the longer our buildings are the more they've been depreciated here then I think Kelly's where there's also this huge variance is now all of the sudden we're saying saying that the district has and we'll look down below at liabilities that the district has a liability for pensions no we don't um it it is not our liability but gby makes us put that on our financial statements I would also say that the due within one year and the due in more than one year the $341 million that represents in general the outstanding debt of the district when we then look at this net investment in capital assets this is the Phrase That Pays on Capital assets so essentially this is our fixed assets minus the amount that we owe on those fixed assets and so we have our net investment is approximately $36 million but what you'll also see then is we have funds that are set aside specifically for Taber and debt service and food service and we'll come back to those when we talk about um fund balance but then you will see as John Paul was mentioning we have this huge negative number in in the private sector in in the private sector if you had liabilities right here in excess of assets there's a word for that it's not a very good word that that is an ill liquid company it's tending towards bankruptcy and it's really upside down and I think as John Paul mentioned this is not the form that we would take as to whether or not the school district is viable in continuing operations so yes we do have this sort of financial statements overall again that look more at the entire organization and makes this look more like Private Industry same thing with uh Revenue and expenditures and I can show you there's a different way of looking at this so I'm actually going to uh move now back to I'm going to move to the notes because it shows it not the notes the mdna and what the mdna basically shows is it shows let to get to this piece here so we have What's called the government wide financials and then the governmental fund financials this is the one we were just looking at Kelly it's all assets and all liabilities both financial and non-financial both shortterm and long-term okay it would be all revenues um even if it relates to a future year way down the road it treats uh so in this case back to your your question about Can a district afford certain things when when we actually build a building for example or we purchase Well normally we would call a capital asset in this column over here it's actually an expenditure but on this side over here we would capitalize that asset and then we would have that asset and depreciate it over a certain amount of time versus over here we've actually used cash to build that building and over on this side it's actually called it and an expenditure so it's a huge difference we've used current assets cas cash to build those buildings and under this governmental fund structure the governmental fund would say that's an expenditure okay so when another way to look at it here is under governmental activities we then do get to see here's our current assets here's our capitalized assets here's our current liabilities and here's our long-term liabilities so we flip this around to governmental funds if we flip this around to governmental funds we know that current assets is higher than current liabilities gotcha okay that helps and as as James can attest one of the things that the state takes a look at is our current ratio and our current ratio basically says by how much or how many times do current assets exceed current liabilities and then in this case we have a very uh significantly positive current ratio so um the same thing would be with expenditures you would see right in in these areas you'll see that we have no Capital expenditures well that cannot possibly be true so when we look at the governmental fund financials you'll actually see that we do have the current debt service payments and our facilities acquisition and expenditures that are on these statements those don't exist on the others because you would you don't have an expense for Debt Service the other way around you're just reducing your debt okay uh as opposed to no it's really it's really a use of cash and so we've got cash that goes out the door and from a current aspect we would just call that an expense what I think is good here is this is a good reconciliation between what's the difference between fund balance on the governmental funds of 297 million versus Net position of a negative $95 million and this walks us through each of those components which I think is very helpful add back to Capital assets net add back the debt add back back um the pension liability section here and if you take all of those away from the $296 million $297 million fund balance we would then say we have a negative net position of $95 million at the same time our current sort of current year for the audit year Surplus would have been a $43.6 million amongst all funds but we have to take back out the capital outlay out of this because it isn't an expense we have to add depreciation which depreciation is a sort of phantom expense right it didn't cost us any cash so we have to add that back we then add back the repay ments of the debt which in the governmental funds we call an expenditure and then we add back the expense the incremental expense for pensions and that's how we get to the difference between Oopsy Daisy that's how we get to the difference between the fund balances here versus the Net position here so overall 99 and 4400s per of the time the bond rating agencies want to know what is available in fund balance they don't spend a lot of time on net position because they understand that we're not going to to essentially sell those buildings or or make them available for cash and we are not responsible for the pension and oped like abilities so they do concentrate more on the fun balance of pieces so mostly Callie I just talk until people just want like yeah I'm done I stopped listening um and so that's what I try to do was that remotely helpful Kelly yeah that that helped I I just like I said it didn't seem normal but I also you know since you're a school district so that that actually did help a lot thank you so much Aon appreciate it so Aaron it'd be better if you're wearing a Broncos uniform no no no no no no no final four in volleyball is tonight hey Aon I do have a question for you on on the fun balances I think you mentioned this earlier but I think this there's kind of the Byzantine way of kind of how you know Mill levies and Mills you know work relative to funding from the state and everything you know with the mill not passing um is is there any implication to the way we read these financials from the mill not passing you know is it do you you know may not show up yet now but do you what what should we expect to happen from that so I'm going to switch to a different page and we're going to look at the budget comparison schedule of the fund balance so had the mill passed let's say this is the future budget year right after we passed and we're utilizing those funds we would expect this number here to be higher by $34 million the amount of the levy what you will then see is that this year we had an operating surplus of approximately $24.6 million so the gap between the 34 and the 246 it's not huge but it signif you know it is significant enough to have a difference where we then look is in these $478 Million worth of expenditures how many of those expenditures are really one time and we would then have to start looking which we do anyway we do this every year is we look at what are the one-time revenues that can be spent on one-time expenditures the best you know represented representation of that was Esser funds all one time money if anyone spent that on salaries and benefits the money went away so it's very difficult to keep that salary and benefit growing what I would say is that we would hope that school Finance continues to grow it won't grow as fast as probably well depending on what the governor and the general assembly come out of with this next session but I don't think overall based on our current budget strategy for next year and what we're seeing that what we won't do Mike is grow programs if you looked at you know all the things that we were looking at spending money on one of those pieces were salary increases of of a specific amount those won't happen and then we also had an extension of the operating components of CTE so the hope is that but also remember those buildings aren't built yet so with the hope of placing the mil Levy back on the ballot in the next four years would by then we would have those new CTE buildings either buil or in development and then the district would be asking for funds to expand those programs and um you know again I think the voters have the opportunity to say no but four years from now I can't obviously we can't say what's going to happen in the short term Mike I don't I don't see a lot of reductions I just don't see the expansion got it okay so basically what what I'm hearing you say is you guys aren't necessarily worried that there'll have to be major reductions um in our current spending to accommodate the mill not passing correct and we you know first we have this 24.6 million op operating Surplus that we currently have and then we'll move into fund balances that we currently have as well that are are not restricted which I don't think is going to be um really an cause Us in the short term to have to have those issues I can't this may be a uh you know a side detour that we don't want to get into at this point but uh my recollection from when we looked at this stuff last year was especially when we looked at some of the state funding and and where you know some of the I guess districts that get that don't need to get as much State funding because they generate more of their own I mean remember DPS was surprisingly High to me I mean Boulder not surprising but I think one of the things we talked about was the amount of commercial real estate they have and how much that that drives some of the um you know the the taxes that are collected for those districts um just along the I25 Corridor obviously there's like a lot of like light industrial construction you got like the giant Amazon warehouses and a few others seem to be going in all the time um are there projections or expectations that that's that helps and drives a little bit more revenue for the school district or you know have we already kind of factored that in good question so for the school district the answer is no it doesn't drive any expansion in revenue and the reason for that is we have fixed dollar Mills which means our Mill passed and one of them and and Bobby can correct me but I'm somewhere correct it's one of them passed at $9.5 million well that's all we're going to collect is $9.5 million so regardless of our tax base and the growth of that tax base it wouldn't change and none of our M levies uh are all of our M levies are fixed Mill one does grow by inflation the others do not so half of the M half of the mill Grows by inflation and then the others do not and what I want to share with you quickly is um the presentation that we gave at at the board meeting which kind of gives us uh when we set the the M lby here we go open sesame one of one of the things here I think Mike that is important to see is that this line here and I'm color blind I helped put this slide together but I'm color blind so let's just go with the bottom line You'll see the bottom line is actually what we've done these were the these are the flat no growth this is the year we passed an additional Levy but it's no growth until we pass another one no growth regardless of what happens to assess valuations in The District in fact even if the assess valuations were ever to go down we would still collect the same amount of money then you'll see in the 2018 Mill the reason why this bluish purple line grows this growth right here between 18 and and 28 is inflation now if you take what we originally passed this is actually inflation adjusted so what we originally started with we the difference between these two numbers is significant the amount of actual buying power is this more purple line we can't afford the way prices have increased because of the way we've set our Mills hopefully that that makes a little bit of sense and then when you look at net assessed valuation this is much different district school district property area than say Boulder as you mentioned but this and this is this is a a per pupil look but overall as far as a per pupil look we would be the lowest of the 15 Metro areas which as Anglewood with fewer students but substantially higher assessed valuations and Boulder Valley and Denver the same where then we see the mlos per District we're 14th out of 15th and again this is a per pupil we can't raise the type of money that Boulder can on you know one mill at Boulder raises a lot more money than one M here and our Mills don't grow theirs do theirs grow by the amount that their school Finance act Revenue grows and they can Levy to the maximum amount Allowed by state law and we cannot so but good question then and I do want to get what do I have left Carolina about eight minutes eight minutes yep get there so we do have categories of fund balance there are two those that are reserved and we can't touch and those that uh are or we can't touch without significant barriers and then those that are are unrestricted nonspendable we can't spend it because we already spent it that's inventory and prepaid items so that that's just kind of money that's fund balance that's set aside because it's not an expense yet but we've purchased those items we've prepaid for them when we talk about restricted and Mike and I know you had this specific question Taber and multi-year obligations comes directly out of the state constitution then nutrition comes from the USDA if we have money that goes into the fund for nutrition it cannot be spent on anything other than nutrition we can't take money out of that account we can't move it to the general fund we can only spend it on allowable expenditures based on what the USDA allows then the next to our bond related when we issue bonds we are required by Statute and by Bond covenants to spend those proceeds on what we said we are going to spend them on again we can't move them to the general fund and pay salaries and benefits with them we can't you know we can't move them to Athletics and you know pay our coaches more that those things cannot happen on the taxes that pay for the principal and interest of the bonds that's the Levy that was passed that again we cannot utilize those revenues for anything other than paying the principal and interest of the bonds we can never move those monies and so those are really the overall restricted amounts so regardless of whatever these amounts grow to or are lower to they are restricted in their purpose we and this is the um sorry um so this is I'm going to say this is sorry let typo um this is not what this is this is board restricted or board set aside and then these are resources subject to internally um identifiable constraints so I'm sorry about that so when we don't have committed because the only way to commit funds is by board resolution and the only way to uncommit funds is by same board resolution so takes a lot of to do that but when we look at our assignments and this is fairly significant for us right now the assignments of those fund balances those relate to P activities so we have revenues that we've collected for people activities we've said and we've set aside and assigned fund balance that we won't spend that on anything else other than pupil activities the money the reason why we collected it Athletics either fees or gate revenue or advertisements it will stay in in benefit Athletics what we charge tuition for base it stays in the base fund to keep paying for teachers or Educators in it base then we also might decide to set aside for specific contingencies and that includes right now risk so we set aside $5 million for risk let me explain why we would do that because we have seen in many districts across the state that their premiums have gone up 100% and four or five years ago they also went up 100% so they have substantially grown anything that has happened in your personal life has happened to the district our auto insurance has gone up our property insurance has gone up and if we were to have uh any sort of loss to your earlier Point Mike if we had a loss we would have to reduce general fund expenditures unless we had a reserve to pay for it and that is why we have that Reserve U same thing with it we don't normally spend the same amount of funds on it every year so to keep it to keep it from going up and down and impacting the general fund we keep a reserve we do the same thing for instructional materials because again we don't buy or adopt curriculum every year so we want to we want to protect against those EPs and flows of of those expenditures and then we would say the whatever is left is unassigned and the district has a board policy that unassigned fund balance can be no more than 8% and no less than 4% of Revenue and that is what we're you know we think about today and then we take all of that both board policy and things that have come from this all come from or stem from uh gfoa and we'll share more of this and I'll print some of this and put it in into the guidance it used to say two months of expenditures which would be somewhere around 16% it doesn't say that anymore because 16% of expenditures at New York City or La unified is a very large amount but a boiler in Ray costs the same amount as a boiler here so fund balance at Ray and Yuma may need to be larger than the hey I know we're going to run out of time here I just want to make sure I capture my notes in the right places uh I know we were reviewed you know with John Paul today is there a tab for 24.10 there's not right we don't put notes in the workbook on that one no there is not a tab by okay got it I just want to make sure I don't miss anything there so okay 2410 sorry that was the I guess there's a policy for 2410 the annual audit kick off that was on the agenda for today I know we read it with John Paul I just didn't see a tab for it so I wanted to make sure I didn't miss capturing notes somewhere that I needed to I'll make sure that we get that to you if it's something different okay okay great and then the these presentations are are on the drive and and certainly we can talk about them as time permits going forward thank you Erin happy holidays everybody thank you thank you