Logan praised for financial soundness

The auditor for Logan Municipal Schools board praised the district in general for its financial soundness but expressed alarm about wild swings and exponential growth of a liability for which it has no control — future pension obligations for educators.

De’Aun Willoughby, a certified public accountant based in Clovis, told the board during its Nov. 9 meeting before it accepted her audit report the district’s proportionate share of net pension liabilities had risen from about $4 million during the 2014-2015 fiscal year to more than $14.3 million in 2020-2021.

Her report also showed the district’s share of pension liability stood at more than $9 million in 2018-2019, fell to $5.5 million in 2019-2020, then jumped to $14.3 million in the recently completed fiscal year. She told the board she wouldn’t be surprised if next year’s pensions obligations surpass $20 million.

“This is a complete disaster. I can’t believe the numbers,” Willoughby said. “They are not even reasonable.”

She said those numbers are based on typical retirement timetables for teachers in New Mexico.

Willougby said she tried to find out why the state’s pension solvency had degraded so quickly but admitted she “can’t explain it.”

She surmised the state’s slow population growth had stagnated educators’ payments into the pension system and that retirement payments were outpacing that income.

Willoughby said the Logan school district was not alone with its high liability total in pension obligations.

“Every district in the state took a huge hit this year,” she said.

Willoughby said other state pension plans also were “upside-down” in terms of revenue and obligations, but not as serious as the New Mexico Education Retirement Board’s.

“I think bankruptcy is inevitable,” she said of the teacher pension system. “I think it’s hopeless.”

She said educators have no choice but to pay into the state’s pension plan, which she called “unfortunate.”

Logan superintendent Dennis Roch said he doesn’t worry about the pension obligations because he has no control over them. He added that minus the pension obligations, “our balance sheet looks incredibly positive.”

Willoughby agreed. “You don’t know you blessed you are” compared to other school districts, she said, noting Logan had built up its cash and cash equivalents to more than $2.1 million and held nearly $12 million in capital assets.

The audit report listed a few minor findings: several errors in I-9 statements, one employee’s pension withholding was at a higher rate, failure to report three new hires, and one coach who lacked a concussion in sports certificate.

In other business:

• Roch explained the state’s upcoming Test to Stay program, which aims to lessen quarantines for students and staff due to close contacts with those infected with COVID-19.

Close contacts typically were required to undergo 10 to 20 days of quarantine. Under the new system, close contacts will take rapid coronavirus tests on the first, third and fifth day after exposure. Only those who test positive, show COVID-19 symptoms, or miss a test will be required to quarantine.

Roch said the district already has received grant money from the state Public Education Department to fund staff and materials for such testing. He said a program must be in place by Dec. 1. If one isn’t in place by Jan. 1, the district would be fined.

Roch said he supported the Test to Stay program because it keeps more students in school.

“We want to do it,” he said. “This is something we’ve been asking for.”

• Regarding voters’ approval of a bond renewal earlier this month, Roch said it’s likely the district will ask voters to approve a general-obligation bond in 2023. He said its financial adviser suggested an early election on the GO bond to “smooth out” property tax rates in the coming years.

• Roch reported though Logan’s enrollment fell last year during the COVID-19 pandemic, he said that number has largely rebounded this year due to students returning to the district and Logan gaining students from other districts.

He said enrollment stood at 95 in the elementary school, 58 in the middle school, 76 in the high school and 56 online. That total of 285 is near Roch’s projection of 290.