Commentary
The final school district in Orange County, California, has released its annual audit for the year ending June 30, 2023.
The audit for the Magnolia School District was completed by a new outside independent Certified Public Accounting firm on Oct. 3, 2024, and made public on Nov. 4. Unlike the other 27 districts that finished their audits by Feb. 21 of that year, Magnolia School District experienced an eight-month delay due to a change in auditors.
In a statement by Bill Bailey, the District’s Chief Business Officer, it was revealed that the delay was caused by an embezzlement scheme by a former employee, which was discovered in August 2023. The former employee has since been convicted and incarcerated for the crime. As a result, the district decided to switch audit firms in May 2024.
While the annual audit report did not mention this incident, the report for the fiscal year ending June 30, 2024, may provide further details.
With all the audited financial statements now available, it shows that the total unrestricted net position for all districts improved by $769 million, likely due to federal coronavirus relief funding. This led to a positive overall impact of 16.7%.
The residents served by these districts saw a decrease of 15,368 in population, although some cities are served by multiple districts, which may skew the actual number of individuals leaving the county.
Recent accounting rule changes for governmental agencies have improved the accuracy of accounting for assets and liabilities. Audited financial statements from 2017 onwards have provided more transparency for stakeholders. However, unfunded liabilities are still estimated using assumptions that some may consider generous, resulting in lower amounts for pension and other post-employment benefits.
For those interested in previous year’s rankings, The Epoch Times has been a leading provider of financial data for readers. Past rankings from 2019 to 2022 can be found in the provided links.
The rankings are significant as they offer stakeholders a simple metric to compare districts and avoid financial surprises. For instance, Laguna Beach Unified School District saw an improvement in its fiscal status, becoming the only district in the county to move into positive unrestricted net territory.
Other districts also saw changes in their fiscal positions, with some moving up or down in the rankings based on financial performance.
Specific examples include Tustin Unified and Garden Grove Unified, which both made significant improvements in their unrestricted net positions due to increased revenues and responsible budgeting.
Orange Unified also saw positive changes, despite facing challenges such as a recall election and leadership changes. The district’s increase in revenues over expenditures contributed to a reduction in its unrestricted net deficit.
On the other hand, Lowell Joint School District experienced a significant drop in the rankings, leading to the removal of its audited financial statements from its website. The reasons for this decline are not readily available.
The findings revealed that despite revenues exceeding expenditures by $9.4 million, $19.5 million was transferred to restricted assets, resulting in an increase of $9.9 million in unrestricted net deficit.
For Savanna Elementary, obtaining audited financial statements requires contacting Eric Fano of Business Services via email as the municipality does not have a dedicated webpage for this information. Although the district had a surplus of $4.2 million in revenues over expenditures, $6.8 million was added to restricted assets, leading to a $2 million increase in unrestricted net deficit.
Centralia Elementary, a distinguished school, managed to reduce its unrestricted net deficit by $2.8 million, but dropped in ranking due to stronger improvements in neighboring districts like Tustin Unified and Garden Grove Unified.
Huntington Beach Union High also decreased its unrestricted net deficit, albeit not as significantly as Orange Unified and Garden Grove Unified. Fountain Valley Elementary, Buena Park Elementary, and Magnolia Elementary maintained their positions, while Orange Unified and La Habra City Elementary moved up.
Newport-Mesa Unified moved up in rank and considered pursuing another bond measure, despite committing to self-funding improvements after a bond approval in 2000. Magnolia School District improved despite facing fiscal challenges, while Santa Ana Unified, despite being near the bottom, saw its teacher’s union securing a raise for its members.
With limited media coverage on school districts in Orange County, it is crucial to assess their performance. The delay in Magnolia’s ranking completion before the November election highlights the importance of considering fiscal performance when voting for incumbents.
Please note that the opinions expressed in this article are solely those of the author and may not necessarily align with those of The Epoch Times.
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