{
  "id": "2023-01-11_regular",
  "meeting_date": "2023-01-11",
  "meeting_type": "regular",
  "meeting_types": [
    "regular"
  ],
  "title": "Conroe ISD Board Meeting — January 11, 2023",
  "date_display": "January 11, 2023",
  "type_display": "Regular Meeting",
  "types_display": [
    "Regular Meeting"
  ],
  "item_count": 0,
  "has_agenda": false,
  "has_notes": true,
  "pdf_filename": null,
  "packet_url": null,
  "generated_at": "2026-06-18T19:45:21.006963Z",
  "highlights": "",
  "sections": [],
  "agenda_breakdown_md": "",
  "meeting_notes_md": "# Conroe ISD Board Meeting — 2023-01-11\n*Regular Meeting — Unofficial Notes*\n*Based on auto-generated transcript. Not an official record.*\n*Generated 2026-03-28 15:05 UTC*\n\n---\n\n# Unofficial Meeting Notes\n## Conroe ISD Audit Committee Meeting\n### January 11, 2023 — Regular Meeting (7:30 AM)\n\n> **Note:** These are unofficial notes based on an auto-generated transcript of the meeting. They are not official minutes and may contain errors or omissions.\n\n---\n\n## Members & Attendees\n- **Board President / Superintendent:** Dr. Noel (presided over initial portion)\n- **Audit Committee Members:** Including Mrs. Chase (newly elected chair), Mr. Hubert, and other members (some new to the committee)\n- **District Staff:** Darren Rice (Chief Financial Officer), Brian Hayden (Internal Auditor), Dr. Horton (Fine Arts), Marshall (Custodial/Maintenance Director)\n- **External Auditor:** Sarah Roberts, Partner, Weaver\n\n---\n\n## Item 1: Citizens Participation\nNo members of the public signed up to speak.\n\n---\n\n## Item 2: Nomination and Approval of Audit Committee Chair\n\nDr. Noel explained the chair's role: presiding over meetings, working on agendas, and conducting the annual review of the internal auditor. As board president, Dr. Noel noted he is not eligible to serve as chair.\n\n**Nomination:** Mrs. Chase was nominated (noted as \"an auditor by trade\" from a Fortune 100 company). She accepted the nomination.\n\n**Vote:** Approved unanimously by show of hands. Mrs. Chase assumed the role of presiding officer for the remainder of the meeting.\n\n---\n\n## Item 3: Approval of Minutes from September 14, 2022 Audit and Investment Committee Meeting\n\n**Motion:** To approve minutes as presented.\n**Vote:** Approved unanimously.\n\n---\n\n## Item 4: Presentation of Annual Comprehensive Financial Report (ACFR) by Weaver\n\n**Presenter:** Sarah Roberts, Partner, Weaver (external auditor for approximately 14 years)\n\n### Introduction\n- Darren Rice introduced the district's six-member finance team, noting no management comments in the report for approximately 14 years.\n- The district consistently receives the GFOA (Government Finance Officers Association) Certificate of Achievement for Excellence in Financial Reporting.\n\n### Audit Scope and Standards\n- **Type of Audit:** Single audit (financial statement audit + federal awards audit)\n- **Standards:** GAAS, Government Auditing Standards (Yellow Book), and Uniform Guidance (2 CFR 200)\n- **Three Reports Issued:**\n  1. Independent Auditor's Report (opinion on financial statements)\n  2. Yellow Book Report (internal controls and compliance)\n  3. Uniform Guidance Report (federal award compliance)\n\n### Audit Results — All Clean\n- **Financial Statements:** Unmodified (clean) opinion — highest level of assurance\n- **Yellow Book Report:** Clean — no material weaknesses, no significant deficiencies, no material non-compliance\n- **Federal Awards Report:** Unmodified (clean) opinion — no findings; approximately 50% coverage of ~$100 million in total federal expenditures\n\n### Non-Audit Services (Independence Considerations)\n1. A separate Weaver department has provided services to the internal audit function\n2. Assistance with preparation of notes to the Schedule of Expenditures of Federal Awards (2 pages within the 160-page ACFR)\n- Neither service impairs auditor independence\n\n### Key Financial Highlights\n- **Total net position:** Improved from a deficit of $12.7 million (prior year) to positive $30 million\n- **Excluding pension/OPEB items:** Net position approaches $400 million (positive both years)\n- **Major year-over-year changes:**\n  - Issuance of Series 2022A bonds — approximately $340 million in new debt\n  - Increased cash/investment balances and ongoing construction\n  - Federal and state funding increased approximately $30 million\n  - **New GASB 87 (Lease Standard):** Net impact less than $15,000 across five new line items\n\n### General Fund Highlights\n- Fund balance remarkably consistent year over year (increased ~$1 million)\n- Unassigned fund balance covers approximately 95% of total fund balance\n- Unassigned fund balance as a percent of expenditures: ~29-31% (approximately 4 months of operating coverage)\n\n### Pension & OPEB Discussion (TRS)\n- **Pension liability (net):** Decreased from $165 million to $86 million (nearly halved) due to outstanding TRS investment returns in fiscal year ending 8/31/2021 (~$40 billion in investment income vs. normal $10-15 billion)\n- **Sensitivity analysis:** A 1% change in the discount rate could result in swings of up to $100 million for pension and significant swings for OPEB\n- **Key context:** These are actuarial estimates reported on a one-year lag; the district has no control over TRS investment decisions\n- **Deferred recognition:** Accounting standards smooth these swings — net pension effect changed only ~$7 million year-over-year (vs. $80 million raw swing)\n- **TRS governance:** Board of Trustees is governor-appointed (some positions nominated by TRS membership); TRS manages ~$195 billion in assets\n- Committee members noted the contradiction that school districts are restricted to conservative investments while TRS invests across all markets\n\n### Upcoming Accounting Change\n- **GASB 96 (Subscription-Based IT Arrangements):** Effective for fiscal year 2023; similar framework to lease standard; not expected to have a huge impact\n\n---\n\n## Item 5: Approval of Recommendation of ACFR to Full Board\n\n**Motion:** To recommend the 2022 ACFR be presented to the Board of Trustees at the next regular board meeting.\n**Vote:** Approved unanimously by show of hands.\n\n*Note: Sarah Roberts will provide a briefer presentation to the full board the following week.*\n\n---\n\n## Item 6: Update on 2022-2023 Internal Audit Plan\n\n**Presenter:** Brian Hayden, Internal Auditor (CPA, Certified Internal Auditor, Certified Fraud Examiner; 3.5 years with CISD)\n\n### Internal Audit Department Overview\n- Performs operational and financial audits (not curriculum or testing)\n- Staff: One staff auditor dedicated to activity fund audits and PTO audits\n- **Co-source arrangement with Weaver:** Provides supplemental resources, especially for IT audits, without the cost of additional full-time hires\n- Audit plan is based on annual risk assessment (questionnaire sent to leadership ~April; plan approved by audit committee in May)\n- **Significant shift over past 3-4 years:** Expanded from primarily campus activity fund audits to full-service internal audit covering major district systems (IT, transportation, police, payroll, etc.) while maintaining activity fund audits\n\n### Completed Audits\n\n#### 1. Activity Fund Audits\n- Bozeman Intermediate and The Woodlands High School — completed\n\n#### 2. Custodial/Maintenance Audit\n**Two Findings (Opportunities for Improvement):**\n\n**Finding 1 — Warehouse Inventory Accuracy:**\n- Random physical count revealed a 5% initial error rate; expanded testing showed 12% error rate\n- Warehouse processes ~13,000 items annually\n- Root cause: Mostly packaging issues (e.g., partially empty boxes appearing full)\n- Dollar impact: Approximately $1,000 in discrepancies\n- **Recommendation:** Implement random monthly inventory counts\n- **Management response:** Implementing automated monthly count alerts, similar to preventative maintenance system\n\n**Finding 2 — Accident Report Documentation:**\n- Reviewed all accident reports January 2021 through August 2022\n- 37% error rate in report completeness (missing at-fault designations, drug test documentation, incomplete sections)\n- ~75% of issues were incomplete form completion; ~25% were missing supporting documentation\n- Only 19 accidents over the period across ~300 vehicles operating daily — a low accident rate\n- **Recommendation:** Train supervisors on complete documentation; implement supervisory review\n- **Management response:** Transitioning from paper to electronic forms with required fields and notification workflows\n- Committee expressed concern about potential liability from incomplete records and employee welfare documentation\n\n**Two Observations (Lower Risk):**\n\n**Observation 1 — Attic Stock (Construction Leftover Materials):**\n- Leftover construction materials (paint, tiles, doorknobs, etc.) stored at zero cost with no tracking controls\n- **Recommendation:** Implement tracking controls for when items are removed from stock\n- **Management response:** New warehouse will include inventory accounts for attic stock items\n\n**Observation 2 — Duplicate Accident Reporting (Paper and Electronic):**\n- Recommended choosing one format; electronic was selected\n\n**Recognition:** Marshall (Maintenance Director) was noted as a state finalist from TASBO for operations management excellence.\n\n#### 3. Band Instruments Audit (Follow-up — Two-Year Project)\n- **Scope:** All junior highs, intermediates, and K-6 campuses (22 campuses visited)\n- Physical inventory conducted with Dr. Horton (Fine Arts) at each campus\n- **Results out of 2,752 instruments:**\n  - 7 missing instruments (~$35,000 value)\n  - 63 instruments added to Charms system (~$156,000 — already present but not recorded)\n  - Various updates needed (wrong serial numbers, manufacturer, descriptions)\n- **Context:**\n  - ~5,600 instruments at capital outlay level across the district\n  - ~40% teacher turnover in 5-8 grade campuses over last five years\n  - Instrument purchases were delayed twice until inventory was accurate\n  - Many \"added\" instruments were community donations or parent gifts\n  - Teachers voluntarily worked nights and weekends to prepare for audits\n- **Going forward:** Internal audit will step back; schools will maintain under established guidelines; random audits every other year by Dr. Horton\n- Committee expressed appreciation for the urgency and thoroughness of this effort\n\n### Remaining Audit Plan Items for 2022-2023\n\n| Audit | Timing | Notes |\n|-------|--------|-------|\n| **Child Nutrition** | In progress (work program development) | School-centric focus on cash controls and inventory; Weaver resources to assist with scale; state/federal auditors cover nutritional compliance |\n| **IT Cybersecurity Plan Review** | February 2023 | Weaver-led; review of new cybersecurity plan against best-in-class standards |\n| **IT General Controls Follow-up** | February 2023 | Follow-up on prior audit with 14 findings; separate Weaver team (same personnel as original audit) |\n| **Caney Creek High School Remodel** | During year | Standard review of construction/remodel financials |\n| **Police Department Follow-up** | Summer 2023 | Follow-up on 2021 audit |\n| **Annual Attendance (PEIMS) Audit** | Summer 2023 | Annual verification that attendance is taken correctly (basis for state funding) |\n\n---\n\n## Next Meeting\n**Confirmed:** Wednesday, May 10, 2023 at 7:30 AM\n\n---\n\n## Meeting Adjourned\nMotion to adjourn was made and the meeting was concluded."
}