Auditor issues clean opinion as council reviews borough finances, debt and pension notes

The borough’s external auditors presented New Freedom Borough’s 2024 financial audit May 12 and reported a clean opinion with no material findings, councilors heard.

Mark Kephart, the auditor, summarized key figures: the borough reported total assets of roughly $14 million, about $7 million in cash and nearly $7 million in fixed assets net of depreciation. Notes payable taken on for sewer and water improvements totaled about $7.4 million, and combined revenues were listed at about $7.7 million with expenditures around $6.5 million, producing a reported excess of approximately $1.2 million for the year. Kephart also noted capital additions of about $314,000 and depreciation of about $228,000 for the year.

Council members pressed for trends and implications. Kephart said the sewer fund holds the majority of cash (approximately $4.5 million) and that a large portion of bond proceeds received in 2023 remain in the sewer fund awaiting project spending. He flagged that sewer revenues and the structure of intermunicipal payments (Shrewsbury Borough and others that use the plant) are included in those enterprise fund numbers and that related long-term principal payments are shown in the audit’s amortization schedules through 2041.

On pension issues, the audit included actuarial notes showing plan assets valued at about $4.8 million versus actuarial liabilities around $4.7 million at the valuation date cited in the report. The auditor said that valuation updates will appear in next year’s statements and noted about 13 terminated employees who are entitled to pension benefits but had not yet begun receiving them per the actuarial schedule.

Council also discussed specific line items and internal control points: cash reconciliations, recognition of real-estate tax revenue when received, and the transition to capitalizing fixed assets (modified basis of accounting started in 2023). Kephart said auditors reconcile major assets, review debt principal and interest payments, and perform sampling on payroll and paid bills for approval and documentation.

Although the audit was presented to council, Borough Manager Andrew Schafer reminded members that borough code and state statute require that the audit be filed with oversight agencies and that council’s role is receipt of the report rather than formal adoption.

Council took several finance actions related to projects discussed during the audit presentation. Members approved payment application No. 2 to PSI Pumping Solutions for Phase 1 aeration upgrades in the amount of $13,489.62. Council also approved release of the borough’s May allocation to the Paul Smith Library (motion passed) and voted to submit the draft regional comprehensive plan to the York County Planning Commission for review. The council reappointed an outside solicitor (Walt Tilley) and approved a resolution supporting America250PA.

Grant and capital spending timing drew follow-up requests from councilors. Schafer and staff said that the borough had been awarded multiple grants, including a FEMA Hazard Mitigation grant referenced in the packet; staff noted that large awarded grants (including wastewater bond proceeds and FEMA funding) are staged across 2024–2026 project activity and that the grants report will be clarified to show award year and funding status more clearly.

What happens next: staff will provide the audit report to required agencies, incorporate council feedback into budget planning and project cash‑flow forecasts, and process the approved vendor payment and library allocation.