HCPSS Receives Unmodified Opinion in FY20 Comprehensive Annual Financial Report; Reports Reduction of Health Fund Deficit from $39.2 million to $18.7 million
October 30th, 2020
The Howard County Public School System has received an unmodified opinion from CohnReznick, LLP, included in the Comprehensive Annual Financial Report (CAFR) for fiscal year (FY) 2020. The unmodified opinion of the HCPSS financial statements certifies that the auditor found all audited financial statements, in all material respects, to be in accordance with the applicable financial reporting framework. HCPSS received an adverse opinion for FY 2019, when auditors noted the lack of a plan to eliminate, or any positive movement toward reducing the Health Fund deficit. During the fiscal year, HCPSS reduced the accumulated deficit in the Health Fund from $39.2 million to $18.7 million, a $20.5 million decrease.
“Since my first day leading the Howard County Public School System, I have been shining the light on this major financial issue and we have made fully funding our health care obligations for our employees and eliminating this deficit a top priority,” said HCPSS Superintendent Dr. Michael J. Martirano. “I want to commend our staff who have worked diligently to manage the FY 2020 budget amidst a pandemic, ensuring that HCPSS not just stay the course but go even farther than our original plan to incrementally reduce the deficit and reverse the adverse audit opinion.”
“The reversal of the adverse audit opinion is a significant step forward and an affirmation of our work during FY 2020 to implement the plan and incrementally reduce the deficit,” stated Mavis Ellis, Board of Education Chair. “I want to commend the Superintendent and staff for their efforts and hard work and thank the County Executive and County Council for their continued support of this important priority.”
For the fiscal period ending on June 30, 2020, the HCPSS Health Fund deficit decreased by $20.5 million, from $39.2 million to $18.7. In FY 2020, health expenses came in under budget, generating savings within the fund. At the same time, budget reservations and managed hiring and spending practices generated additional savings. These savings, combined with the action to use $7.2 million from the HCPSS fund balance contributed to the deficit reduction.
From FY 2015 through FY 2018, the Health Fund was underfunded, contributing to an accumulated deficit of $39.2 million. A detailed description of the history and factors contributing to the deficit is provided online. The recent unmodified opinion is largely due to the plans and progress made by HCPSS to reduce and ultimately eliminate the Health Fund deficit.
The full report and additional information are available online.