AUDIT MANAGEMENT LETTER

September 20, 2021

Board of Directors

Addison Northwest School District

11 Main Street, Suite B100

Vergennes, VT 05491

Management Letter

In planning and performing our audit of the financial statements of the governmental activities, business type activities, each major fund and the aggregate remaining fund information of the Addison Northwest School District as of and for the year ended June 30, 2021, in accordance with auditing standards generally accepted in the United States of America, we considered the District’s internal control. We did so to determine our auditing procedures for the purpose of expressing an opinion on the financial statements, but not for expressing our opinion on the effectiveness of the Addison Northwest School District’s internal control over financial reporting or compliance.

During our audit we became aware of several matters referred to as “management letter comments” that offer opportunities for strengthening internal control and improving operating efficiencies of the Addison Northwest School District. The following pages summarize our comments and suggestions on those matters.

This report is intended solely for the information and use of the Board of Directors, management and others within the entity and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

These matters do not modify our opinion on the financial statements for the year ended June 30, 2021, where we expressed an unmodified opinion on our independent auditors’ report dated November 1, 2021.

Student Activity Account Purchasing & Approvals

While performing the audit for the above-mentioned fiscal year, we noted multiple instances where the student activities disbursement request form was completed after the invoice was received. The District’s procedure requires approval of student activity purchases prior to purchase. We also noted multiple instances where the disbursement approval form was not signed by the principal in accordance with the District’s procedure. We recommend that management review and revise its procedures as necessary to ensure that student activity purchases are approved prior to purchasing and that complete documentation is obtained to ensure accuracy and completeness of transactions and to help avoid material misstatements in the financial statements.

Related Party Transactions

While performing the audit for the above-mentioned fiscal year, we noted that the District did not have documentation on file to support the related party transaction process during the year. We recommend that the District document and retain all documentation related to the related party transaction process to help reduce the risk of fraud and to help ensure compliancefor all applicable reporting disclosures in the basic financial statements.

We would like to sincerely thank Elizabeth, April, Jody, Dan, and all of the staff of the AddisonNorthwest School District for their assistance in completion of this engagement.

If there are any questions regarding this letter, please do not hesitate to call.

Very Best,

RHR Smith & Company, CPAs

2021 Informational Meeting Minutes

ANWSD Board of Directors

Informational Meeting

Monday, February 22, 2021

6:00 PM

Virtual Recorded by Media Factory

Board: Amy Kittredge, Laurie Childers, Bill Clark, Chris Kayhart, George Gardner, Kristina MacKulin, Kirsten De La Cruz, John Stroup, Mark Koenig, Martha DeGraaf, Tom Borchert

Student Rep: Reagan Kayhart

Administration: Sheila Soule, Superintendent; Elizabeth Jennings, Director of Finance & Operations

Guests: Glory Martin, Autumn Rozon, Barbara FitzPatrick, Carolinne Griffin, Chelsea Audy, Dave Tatlock, David Loven, Wanda Loven, Kimberly Trombley, Leah Foerster, Mary Anne Michaels, Mary Neffinger, Rebkah Whitehurst, Steve Rapoport, Sue Rakowski, Sunshine Ouimette, Torrey, Amanda Corcker, Chris Spencer, Amanda VDW, Jeanne Comouche, Nancy Ambrose, Rose Wenzel, Mel Hawley, Jaime Wells, Jessica James, Nancy Armell, Diana Raphael, Susan Bodette, Carol Spencer

CALL TO ORDER:

Chair Stroup called the meeting to order at 6:01 p.m. He explained the reason for the purpose of the meeting and how the public can participate. Due to the State of Emergency declared by Governor Scott as a result of the COVID-19 pandemic and pursuant to Addendum 6 to Executive Order 01-20 and Act 92, this public body is authorized to meet electronically. In accordance with the temporary amendments to the Open Meeting Law, it is confirmed that access has been provided by remote access through video, livestream on Facebook, and by phone access.

There will not be any voting conducted at this meeting. All articles will be voted on by Australian ballot on Tuesday, March 2, 2021.

Introductions of the Board and administration present were made.

AGENDA:

Chair Stroup reviewed the agenda and explained that the public will be given the opportunity to comment after each Article presented. He asked if there were any additions or changes to the agenda from the Board or the public. Hearing none, the agenda was approved as presented.

PRESENTATION:

Superintendent Soule and Director Jennings presented a slideshow of the School District Budget.

• 2020-21 Accomplishments o Welcomed ACS students to VUES o Operationalized Addison Wayfinders Experience (AWE) located in the former ACS Building- AWE is an alternative program for Middle and High School students from ACSD, MAUSD, and ANWSD with currently 14 students o Persevered through associated challenges of COVID-19 pandemic o Provided remote and hybrid learning, additional childcare, and food service during periods of closure and in the summer months

• Budget Objectives for FY22 o Approach was to level fund the budget without compromising programming o Keep configurations of grades and facility use the same (no major change for FY22) o Incorporate small-win changes for innovation where possible (e.g., PreK Child Care pilot) o Make use of available surplus funds in ways that brace us for financial challenges ahead (impact of Weighting Study, post COVID economy, declining enrollment)

• Budget Highlights o No increase to supplies or other non-contract costs o Includes expansion of full-day childcare in conjunction with PreK programming at FCS o Continues all current programming for students in the FY22 school year including programs added last year (health, PE) o Provides high levels of staff support for professional learning to help fulfill the goals outlined in our Continuous Improvement Plan o Increases support for 1:1 technology o Net reduction of 2 FTE equivalent in staffing based on projected student needs in the areas of direct instruction and student support services o Reductions to field trip transportation

• Budget Facts o The total Expenditure budget decreases by $238,381 or (-1.09%) o $266,000 of surplus funds from FY20 o ESTIMATED FIGURES AS PUBLISHED:

 Estimated figure of Equalized Pupils 938.34

 Education Spending as compared to FY21 decreases by 4%

 Education Spending per pupil decreases to $19,289.79 which is a decrease of $589 per pupil or (-2.96%) o FIGURES WITH STATE CHANGES:  o CLA’s will drive education tax rates higher than FY21 in 4 of our 5 towns. However, with the potential changes, every town should see a decreased tax rate in FY22. Waltham will see the smallest decrease and Panton will see the largest.

 Our debt credits are estimated to be more than double the anticipated amount we need to stay below the penalty threshold.

 If all estimates hold such as the yield, threshold, equalized pupils, and debt credits, this proposal would result in a union district tax rate of 1.7722 which is exactly the same as FY21’s actual rate.

REVIEW OF ARTICLES:

Article 1: To elect a Moderator for the term of one year: David Tatlock Public Comment - none

Article 2: To elect a Clerk for the term of one year: Martha Kenfield Public Comment - none

Article 3: To elect a Treasurer for the term of one year: Greg Burdick Public Comment - none

Article 4: Shall the voters of the Addison Northwest School District vote to authorize stipends to be paid district officers including the directors ($850 each member, Board Chair $1,275, clerk $150, and treasurer $3,000)?

Amounts are the same as previous years.

Public Comment - none

Article 5: Shall the voters of the Addison Northwest School District vote to authorize the Board of Directors, under 16 VSA 562 (9), to borrow money by issuance of bonds or notes not in excess of anticipated revenue for the school year?

It is necessary to borrow because of the time lag between receipt of taxes and beginning of a new budget.

Public Comment - none

Article 6: Shall the voters of the Addison Northwest School District vote to authorize the Board of Directors to electronically distribute the annual report?

Public Comment - none

Article 7: Shall the voters of the Addison Northwest School District approve the Board of School Directors to expend $21,604,213 which is the amount the school board has determined to be necessary for the ensuing fiscal year? It is estimated that this proposed budget, if approved, will result in projected education spending of $19,289 per equalized pupil. This projected spending per equalized pupil is 2.96% lower than the spending for the current year. Reminder, the changes to the yield and equalized pupils will equal lower rates.

Public Comment - none

Article 8: Shall the voters of the Addison Northwest School District vote to establish an Education Stabilization Reserve Fund, pursuant to the provisions of 24 V.S.A. §2804, for the purpose of funding future budget shortfalls with adherence to the Districts' current Fund Balance Policy, and authorize the Board of School Directors to assign any surplus funds at the close of the fiscal year, up to an amount not to exceed 4% of current year annual expenditure budget?

Chair Stroup reviewed and explained the purpose of an Education Stabilization Reserve Fund. Establishment of the fund and allocation of funds for an amount not to exceed 4% of the annual approved expenditure budget. If approved by voters, the appropriate amount of Unassigned Fund Balance from the General Fund above will be allocated to the reserve fund.

This fund is designed to pay for future budget shortfalls for items unforeseen in any given year’s budget process. To utilize funds from this reserve, administration must track unbudgeted items and propose funding of any items that were not covered elsewhere in the current year budget to the board, at the close of each fiscal year. The Board then has the authority to approve the usage at a duly warned board meeting.

Public Comment - Mel Hawley, Vergennes: How does this relate to the $266,000 allocation? This fund is separate from the $266,000. To help address unforeseen expenses. M. Hawley: Is the 4% cap annual or aggregate cap? It’s an aggregate not to exceed 4% of the annual approved budget. M. Hawley stated the article should be clearer.

Article 9: Shall the voters of the Addison Northwest School District authorize the assignment of $475,000 pursuant to the provisions of 24 V.S.A. §2804, from the fiscal year 2020 fund balance to the ANWSD Capital Improvements Fund, established by the electorate on March 7, 2017? This will help to address future building needs, such as the High School roofing project.

Public Comment - M. Hawley: Is the surplus $1.9 million? Yes, which includes the amounts that have been assigned (voter approved last year Health Insurance Reserve Fund at $200,000) and the money that will be “claw back.” Meaning any money or benefits that have been given out but are required to be returned (clawed back) due to special circumstances or events. Coronavirus Aid, Relief and Economic Security (CARES) and Coronavirus Relief Fund (CRF) funds will cover many unexpected and unbudgeted costs school districts incurred due to the pandemic. CARES Act funds also cover many budgeted costs eligible for reimbursement per federal guidelines. Total surplus is allocated at $1.58 million after these amounts are deducted.

M. Hawley: Does the Board intend to put the full 4% in the education stabilization fund? No, there won’t be enough to cover the full 4% this year.

Article 10: Shall voters of the Addison Northwest School District authorize the Board of School Directors to incur indebtedness not to exceed $380,000 for the purposes of mold mitigation in the Early Childhood wing of the Ferrisburgh Central School?

Planning to continue to use FCS facility for some District purposes (maintain elementary school, Early Childhood, District offices, other possible uses). Building can only be used now by running HVAC systems in a way that is inefficient and not cost effective - must be addressed. Financing a portion of this project due to very low current interest rates (1.75% for 5 years). ANWSD has very low debt (auditors told us last year) and debt helps us stay under state tax penalty.

Public Comment - M. Hawley: Is the $266,000 coming from the new fund? No, it is coming from the surplus funds.

M. Hawley: Will the transfer to the Capital Reserve and the proposed debt increase spending costs? It does not increase the per pupil spending, but gives us a debt service credit, which helps decrease the amount of going over the threshold.

WHERE TO FIND INFORMATION & HOW TO VOTE:

K. MacKulin reviewed the information on how to locate the ANWSD Annual Report by going to the ANWSD website or calling the District Office to request a copy. There are numerous budget documents available on the website. The polling locations and times for March 2, 2021 are as follows:

Diana Raphael corrected the start time for Panton is 10 A.M.

PUBLIC COMMENTS:

Sue Rakowski, Vergennes: No questions, thanked the Board and administration for a clear presentation and the hard work. She recognized the accomplishments over the past year of the Board - creating an anti-racist statement, creating student representative responsibilities and procedures, a decreased budget for the second year in a row, and faced the challenges with COVID-19.

NON-BINDING BUSINESS:

C. Kayhart asked to take a moment to recognize the passing of Ann Sullivan - long time teacher at VUHS and to the whole community.

ADJOURNMENT:

Motion was made by T. Borchert, seconded by G. Gardner, to adjourn the meeting at 7:11 p.m. So voted and motion carried.

Submitted by Glory

Martin

Recording Secretary

The legal voters of ANWSD met on Tuesday, March 2, 2021, at the usual polling places to vote by Australian ballot on the above articles with the results as follows:

Respectfully submitted and verified, Martha Kenfield District Clerk Addison Northwest School District