Holyoke School District sails through 2022 audit

Scott Szabo of Lauer, Szabo and Associates arrived from Sterling to Holyoke as the trees turned orange in mid-October, seeking school district financial data, and information on its processes and procedures. He left that same day, satisfied with his findings.

Ben Rahe, director of budget and finance for the Holyoke School District, said its Fiscal Year 2022 audit went quickly in part due to pre-planning and also because of location. Szabo settled for the day within the district’s administration office, speeding up communication between himself, Rahe and School Superintendent Kyle Stumpf. In previous years, audits had been conducted from within the school itself; the new process proved faster.

“It worked out great,” Rahe said. “If that’s how they want to continue to do it, I’m more than happy.”

The school district ended its 2022 audit with an extra $75,000 in reserve funding, increasing its total balance to just over $3.4 million as of June 30. This increase accounts for a more than $400,000 transfer to the school’s Capital Projects Fund, established to pay for the construction of major facilities or other assets.

With the surplus, Rahe said, the school accumulated five months of reserves in case of a “rainy day.” 

“We try to have at least a minimum of three months to feel comfortable,” he said. “Five months gives us a pretty good cushion.”

Audit examination

Szabo briefed the district’s Board of Education the evening of Wednesday, Dec. 7 on the finer points of his company’s 100-page audit.

One change he noted involved the Food Service Fund. With the advent of free meals in Colorado schools, federal sources account for nearly 95 percent of the district’s $428,000 in food costs. This number would not have been nearly as high, Szabo said, even “one or two years” previous.

“Next year, there’s a little bit of a shift with the federal subsidies...we’re still trying to figure out how that’s going to shake out,” he said in reference to Coloradans recently voting in a free meal program organized by the state. “I think you’re still going to see a larger influx in revenue than what you might have historically had.”

The district’s Building Fund, by the fiscal year’s end, had shrank by about 90 percent – from $1.7 million to $175,000 – but this was to be expected, Szabo said. The district established the fund using Capital Projects monies in conjunction with the Building Excellent Schools Today Grant. With the combined revenue, they funded $4 million in construction improvements at Holyoke Junior/Senior High School. Howell Construction completed the project between mid-January 2021 and August of that year.

“Once that is all gone, then this fund will go away,” he said. “It’s a short-term fund.”

The Pupil Fund, established to record transactions by student organizations – FFA, athletics and the like – gained $163,0000 for the fiscal year, more than $38,000 above its $124,000 in costs.

“The important thing to note with this one is there’s not general fund money in there or district money,” Szabo said. “That’s money raised by those organizations, so you’re acting as a fiduciary and holding those funds for those organizations.”

‘Economic Factors’

Mentioned in the “Economic Factors” section, the audit noted Phillips County’s recent problems with both farming and housing.

“This last year was particularly challenging due to drought conditions,” the audit states, adding that a lack of housing “is a prohibitive factor for new employees and new families moving to the area.” While the budget for Fiscal Year 2023 continues to be adjusted, the audit notes, “new legislation implemented in the state” appears to have resulted in a more than $2.5 million decrease in the total assessed value of properties within the district.

The audit estimates in 2023 the district will have 20 fewer students; this, it continues, “is expected to lower the funded count from 602.8 to 594.5.” The funded count, Rahe said, is based off a five-year average of student population. Holyoke’s initial budget is based off a projection of 598 students.

“Maintaining a level student population will continue to be an uncertainty for the district,” the audit states, “due to being located in a small community and the lack of housing options.”

The district, Rahe said, does not have a significant amount of control over area housing, though he did note both Phillips County organizations and Superintendent Stumpf were heavily involved in local economic development planning. Still, he continued, it’s “always a challenge” to keep a high number of families in town.

“There are so many communities that aren’t far from Holyoke,” he said, “so if there’s housing available in a different community, that’s where [parents] tend to stay and that’s where they tend to send their kids to school.”

Colorado Department of Education data show – between Fall 2012 and Fall 2013 – the district student population experienced a significant drop from 630 to 568 pupils. Since then, Rahe said, it remained relatively level: The Fall 2020 count sits at 584.

In addition, the school’s general fund balance has managed to increase each year over the past half-decade, from more than $1.2 million in 2018 to a little over $3.4 million in 2022.

Regarding the increase, Rahe said, “A lot of times, it’s just being fiscally responsible and seeing where you can change some of your spending habits.” When the coronavirus pandemic hit and shut down the school for some time, he added, it proved important to use government funds effectively when supplementing educators’ salaries and benefits.

Overall, Szabo told to the school board, “the audit went very well, as it historically has,” adding, “it’s one of our smoother audits that we do for the schools.”

As for Rahe, he appreciates when “the auditors come in and they don’t find any major issues.”