School district’s delayed financial audit could impact when property tax revenues roll in

Delays that set Aspen School District’s annual financial audit months past its initial deadline may have an impact on when the school district receives property tax revenue from the county.

A staffing crisis at the district and at the auditors’ office were among the factors that impacted the timeline of the audit, which was initially supposed to be submitted by the end of 2021; the district filed a 60-day extension until March 1 but work was still in progress as of late April.

District Chief Financial Officer Linda Warhoe and auditor Paul Niedermuller from the firm CliftonLarsonAllen explained to the Board of Education on Wednesday that staffing challenges, a new auditing firm and delays in federal compliance information impacted the timeline.

“At this point, the district and their auditors are fully committed to meeting all future filing deadlines,” Warhoe said Thursday. She emphasized that the district has “a very strong, aggressive plan to get this thing done” and that Aspen School District’s audit is now a “top priority” for the auditors.

Board of Education President Katy Frisch noted Wednesday that the issue is one of process and procedure and should not be interpreted as an indication of fishy finances.

But in the meantime, the state has authorized Pitkin County to withhold funds generated from taxes that support the district’s operations because the audit still has not been filed. Audit deadlines for school districts — and the impacts when those deadlines aren’t met — are part of the state law.

The school district has a six-month window after the end of the fiscal year (which is June 30 for the district) to file an audit with the state.

State law says that the auditor should submit the audit report to the district within five months of the close of the fiscal year, then the district has another 30 days from the date they received the report to file it with the state auditor.

If the district can’t meet that deadline of Dec. 31 to file with the state, they can file for up to a 60-day extension, which is exactly what Aspen School District did. But by March 1, the auditors still hadn’t finished the audit at Aspen School District.

According to the state law, if the district hasn’t filed a report with the state by then, the state auditor “shall either” do one of two things.

One, they can notify any county treasurer holding tax funds for the district about the district’s delinquent status, and they can “prohibit the release of any such moneys until the local government submits an audit report to the state auditor,” the statute states. Two, they can “make or cause such audit to be made at the expense” of the district, which “shall reimburse the state auditor” for the costs of that audit.

The office of the state auditor went with option one and sent a letter to Pitkin County Treasurer Ann Driggers on April 19 about the district’s delinquent status. (The county treasurer “collects property taxes on behalf of Aspen School District,” Driggers said in a phone call. Then the county releases the funds to the district.)

That letter informed the treasurer that the district has not yet filed its annual report for the fiscal year ending June 30, 2021, and authorized the county to withhold tax funds from the district in accordance with the state statute, according to a copy of the letter Driggers provided to The Aspen Times.

“I am authorizing you to hold all current and future funds in your possession generated pursuant to the taxing authority of such local government,” local government audit manager Crystal Dorsey wrote in the letter. “Do not release these funds until you are notified in writing to do so by my office.”

Driggers confirmed in an April 19 letter reply that she had “been notified of the delinquent audit status” of the district and that she will “hold all funds generated pursuant to the taxing authority of such local government (the district) until further notification from the Office of the State Auditor.”

Pitkin County Manager Jon Peacock said in a phone call Thursday that the county is still collecting the funds but just isn’t distributing them yet.

“This is something that happens from time to time with districts and getting their required audits or budgets submitted. … My understanding is the school district is working hard to get that audit complete so that they can resolve the issue,” Peacock said.

Neidermuller said at the board meeting Wednesday night that he was “confident” the audit would be ready in the next 30 days. Warhoe said in the phone call Thursday that progress was nearing the finish line pending final review and adjustments.

“I’ve got the financials prepared, they’re done, they’re waiting on their (the auditors’) blessing,” Warhoe said.

A late-afternoon phone call and email to the state auditor’s office and phone call to Neidermuller were not returned by the time of filing Thursday evening.

kwilliams@aspentimes.com