PSS expenses in FY 2004 decreased by approximately $1.3 million or 2.4%. This is according to an independent audit conducted by J. Scott Magliari and Company. The major decrease in expenses was a result of roughly $2.2 million cut in instructional expenses. In FY 2003, PSS spent $46.3 million in instructional expenses while it only spent $44.1 million in FY 2004. However, PSS experienced an increase in supporting expenses. Over $9 million in support services expenses were incurred in FY 2004 compared to less than $8 million in FY 2003.

Fiscal Year 2004 Performance

The Public School System operates 22 schools and employs over 1,150 government workers. PSS receives funding from several sources including federal grants and transfers from the CNMI government. In FY 2004, PSS received about $16 million in federal grants and about $37 million in transfers from the CNMI government, representing an 11.65% increase in revenues from the FY 2003 level. Most of this increase is attributable to the 19.37% increase in transfers from the CNMI government, from $31 million in FY 2003 to $37 million in FY 2004. Federal grants for the same period fell by almost $1.8 million, or 9.88%.

PSS has not incurred any long-termdebt even with the opening of several new schools in recent years. CNMI House Joint Resolution No. 10-36 authorized PSS to issue general obligation bonds to help leverage federal capital improvement project funds to finance school construction projects. The bonds are to be repaid by the CNMI Government through the appropriation of liquid fuel taxes pursuant to Public Law 11-14. Consequently, the bonds are recorded on the books of the CNMI Government and not PSS. Furthermore, PSS has been able to operate all 22 schools without any major changes to its budget. This was made possible through the reprogramming of funds from other schools, as well as the cutting of certain expenses

In FY 2004, the total CNMI cost per child was 34.64% less than that spent by the federal government. The total CNMI spending per child has not varied significantly in the last five fiscal years. However, the narrowest gap between the two levels occurred in FY 2000 whenthe CNMI spent $5,510 per child compared to federal spending of $6,865 per child. What should be noted, however, is that in spite of the increase in student population since FY 2000, the CNMI spending level has remained somewhat constant per child.

Audit findings are reportable items considered material by the auditors. Findings document situations where established policies, procedures or standards have not been followed. Such deviations may lead to losses for the CNMI or misstatements in its financial reports. Findings, if they remain uncorrected, can ultimately lead to qualifications in the Opinion of the auditors. For FY 2004, there were 20 reported findings, an increase from 8 reported findings in FY 2003.

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Download/view PSS Audited Financial Statements FY 2004