Audits

No. To be very clear, all funds are accounted for and were used only for district capital projects approved in prior Issaquah School District Bond Resolutions.

Because that was the proper protocol to follow when we discovered these irregularities. We proactively took action to contact the state auditor.

Auditors found that 2012 and 2016 capital project bond funds were spent on older capital projects outside of the scope of the governing board bond resolutions.

Yes. This report can be seen on the State Auditor website; it is also available on this webpage under "Yearly Audit Reports."

This was not intentional, but rather symptomatic of inadequate internal controls for monitoring, managing, and ensuring proper use of capital funds. That has since been rectified.

A full list detailing the use of these funds is available on our Capital Projects webpage. 

We have taken significant steps to enhance the financial management and oversight of the Capital Projects Fund, including staffing changes, enhanced reporting, improved checks and balances, ongoing professional development and training and establishment of a Future Bond Oversight Committee.

We are confident these measures will address the concerns raised by our internal review and the audit and strengthen our overall financial management practices moving forward. These are also actions recommended by the SAO.

Our 2022-23 general fund ending fund balance was 13% of actual expenditures, which Standard & Poor’s recently noted as a “strong general fund balance.” Additionally, the main driver of revenue is enrollment. Our enrollment has started to stabilize. Information about district finances can be found on our Finance & Budget webpage. 

We currently have an AA+ Bond Rating by Standard & Poor’s. The Issaquah School District is one of only 65 districts with this rating nationally. Over the past year, bond rating agencies reviewed and confirmed our rating to reflect our solid financial condition. 

In a ratings press release from December of 2023, Standard & Poor’s stated: “Issaquah School District continues to have some of the strongest credit fundamentals in the state, including an affluent service area in the Seattle region, long-standing voter support for supplemental operating revenue, and strong reserves.”

Bond rating agencies consider many factors in their ratings, including fund balance, enrollment trends, strength of the local economy, and assessed property value. 

Independent of this situation, the district will need additional funding in the future.

We have taken steps to improve financial oversight and compliance, including staffing changes (adding a controller and capital projects accountant), enhanced reporting, additional checks and balances, and ongoing training. Also, the district intends to further enhance accountability for future bond projects by establishing a Bond Oversight Committee.

We expect and hope that the public will look at our record and keep in mind the new procedures we have put in place to strengthen our overall financial management practices. 

A Bond Advisory Committee is currently meeting to look at possible future measures. The district still has needs in terms of capacity at the high school level. High school enrollment exceeds our current space and is higher than the student population in 2015 when the need was initially established. In addition, safety and security upgrades, building modernization, and resources for innovative spaces are being considered. A bond measure could potentially be placed on the ballot as early as November 2024.

The SAO audit found the following: 

• The district used $4,872,908 of the 2012 bond proceeds for three capital projects that were outside the scope of the bond resolution. 
• The 2012 bond proceeds were $1,309,740 more than the total capital project payments tracked by the district. 
• The district used $46,258,909 of the 2016 bond proceeds for 22 capital projects that were outside the scope of the bond resolution.  

We have completed an extensive internal review to identify the projects the 2012 and 2016 bond funds were spent on. All funds are accounted for.

A full list detailing the use of these funds is available on our Capital Projects webpage. 

We conducted an extensive internal review that found all funds were used on otherwise approved district capital projects. This result was in line with the SAO's finding and indicates all funds are accounted for. However, some funds were spent outside of the scope of the applicable bond resolutions.

As part of the transition work of a new administrative team, and in anticipation for upcoming major projects including a new high school, our district conducted a review of capital project fund spending.

During this internal review of capital expenditures, district staff identified capital project bond funds that were spent on older capital projects outside of the scope of the 2016 governing board bond resolution. The district also began reviewing 2012 bond expenditures, but determined it was necessary at that point to turn the matter over to the SAO.

In Jan. 2023, district staff proactively notified SAO of the results of this review, the probable noncompliance issue, and offered our full cooperation with the pending audit.

During the past year, we made changes to help better manage Capital Project funds and keep our community informed. Two new roles were added to our team: a Controller and a Capital Projects Accountant.

The Controller makes sure our money is handled correctly, especially for large district projects. The Capital Projects Accountant reviews and tracks the funds for these projects to make sure they are spent correctly. More information about our expenditure process is available on our website. Monthly reporting includes more detail so that our School Board, superintendent, teachers, and families have access. 

Finally, for any future bond, a group will form to provide ongoing oversight of the use of such funds. This helps keep everything compliant, while building community trust.