Published 2:29 pm Tuesday, March 13, 2007
Beaufort County Schools
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Child nutrition funds were not hidden
Wednesday’s edition of the Washington Daily News has spurred many questions from our community regarding the $1 million fund balance in the child nutrition account. Allegations have been made that the money was “stowed” or “hidden” in the account and then “discovered” by the Evergreen audit. The fund balance has been termed a “slush fund” and one commissioner is even quoted as saying the school system has “built up a bank account on the backs of our children.” Nothing could be further from the truth.
The child nutrition program is the only true business operated by the school system. The goal of our school lunch program is to provide lunches at the lowest possible price while still covering the operating expenses of the program. Like most businesses, the child nutrition program must keep cash on hand to cover their monthly operating expenses while waiting on reimbursements from the United States Department of Agriculture (USDA). The monthly operating expenses for the child nutrition program are approximately $335,000 per month. In deciding how much cash to maintain in the account, we follow the recommendations of the Local Government Commission (LGC) and our auditors (Dixon Hughes Accounting firm). LGC recommends the child nutrition program keep one to two months operating expenses in the account and Dixon Hughes recommends that no more than three months operating expenses remain in the account. Therefore, our goal has been to maintain an account balance of between $335,000 and $1,005,000 each year. If the account balance ever exceeds the $1,005,000 amount recommended by our auditors, our audit report will reflect a “finding” that too much money has accumulated in the account and a transfer needs to be made to the school system. This is exactly what happened in 2005. The child nutrition program had an audited balance of $1.3 million and our auditors made a finding that too much money had accumulated in the account. At that time, we transferred approximately $380,000 to purchase equipment for the new P.S. Jones Middle school.
It should be noted that having too much money on hand in the child nutrition account has only recently become an issue. Eight years ago, the program was not even generating enough revenue to cover its operating expenses. At that time, the school board had to decide whether to increase school lunch prices or reduce the amount of money the child nutrition program paid to the school system for indirect costs such as electricity, gas and the use of the cafeteria. The school board chose to charge the child nutrition program less instead of increasing lunch prices. As a result, the child nutrition program showed a profit of $123,933 in 2005 and a profit of $21,150 in 2006. If the school system had chosen to charge the child nutrition program for all of its indirect costs, the child nutrition program would be paying the school system $283,000 each year and would show a loss at the end of each year. In three years time, the child nutrition program’s fund balance would be below all recommended guidelines and the child nutrition program would be required to increase the cost of school lunches.
I do not believe it is fair to criticize the child nutrition program for keeping school lunch costs down and following the recommendations of the state and our auditors as to fund balance. I also have a difficult time understanding how anyone can claim this money was “hidden” or somehow “discovered.” Dixon Hughes is the outside accounting firm who audits our records every year. They follow all standards and procedures outlined by the accounting industry as well as recommendations from the LGC. A copy of our audit report is provided to the county every year and made available to the public upon request. You may also view our audit online at www.beaufort.k12.nc.us and I encourage each of you to do so.