The Carlton School Board set its payable 2021 levy at the maximum during its meeting Monday, Dec. 21.

Despite setting the levy at the maximum, the levy amount — $1,571,193 — was actually approximately $42,000 less than the 2020 levy, a 2.6% decrease.

During the board’s truth in taxation meeting prior to the regular board meeting, Jennifer Smith, an accountant with the Arrowhead Regional Computing Consortium, presented the district’s budget and levy. She said the decrease was largely due to a drop in the amount the district is paying toward debt service.

The district finished paying off a capital facility bond issued in 2010, meaning the only outstanding bond obligation left for Carlton is the $5.5 million bond issued in 2018 to make health and safety improvements at South Terrace Elementary School.

The annual payment of more than $700,000 on the 2018 bond represents approximately 45% of the total levy for 2021.

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The total 2021 levy represents less than one quarter of the district’s annual revenue. State sources make up nearly $4 million — or 59% — of the school’s $6.8 million expected revenue.

The district’s budget showed expenses outpacing revenue by more than $456,000 in the 2020-2021 budget, but business manager Norman Nelis said he expects to ask the board to approve an amended budget early next year.

Outgoing board member Jennifer Chmielewski voted against the levy recommendation, but the remaining five board members voted for the motion.

No members of the public spoke or asked questions during the truth in taxation meeting.

District receives clean audit opinion

The Carlton School Board also accepted its 2020 audit report during the meeting.

Matt Mayer of the firm BerganKDV delivered an unmodified or “clean” opinion to the board. The firm found two deficiencies during the audit. The first was a lack of segregation of accounting duties and a lack of internal written policies and procedures.

Mayer said with just Nelis working in the role of business manager in such a small district, Carlton doesn’t have “a great opportunity to mitigate significantly” the first finding, but he encouraged the board to develop written procedures that can be easily followed.

Nelis told the board he is aware of the issue and is placing a priority on developing the internal policies over the next several months.

Otherwise, the district finds itself in a “strong financial position in relation to the state averages,” according to Mayer.

The district’s general fund revenue fell short by about $100,000 in 2020, but expenditures were about $315,000 less than anticipated. The revenue decline was due mostly to a drop in federal impact aid, Mayer said.

Expenses for the district fell because of savings on supplies, contracted services, building maintenance and utility costs related to distance learning because of the COVID-19 pandemic.

The district still had a deficit for 2020, but instead of the projected deficit of more than $363,000, the actual loss was less than $150,000.

Despite the deficit in 2020, the district has a relatively healthy general fund balance of $1.5 million, with nearly half that amount in the unassigned fund. The $1.5 million balance is about 21% of district’s expenses, slightly above the state average of 20%.

“You’re right in line, financial-health-wise, with your peer group out there,” Mayer said. “With all the headwinds your district has had to face — all the adjustments related to revenue, the flat revenue, the cuts you’ve had to make — you’ve been able to maintain reasonable levels of financial health and that 21% fund balance is a very good place to be as unfortunately we are going to see some additional headwinds from the state going forward.”