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Audit finds clean opinion; finance committee reviews fund balances, possible capital transfer and insurance issues
Summary
The finance committee received a clean audit opinion and reviewed fund-balance trends, a potential post-audit transfer to a capital reserve, a recommendation to avoid a technology lease to save interest costs and an unresolved flood-insurance question affecting property coverage.
Quakertown Community School District’s finance committee on May 8 received an audit presentation that delivered an unmodified (clean) opinion and discussed fund balances, a potential transfer to capital reserves, an analysis of a planned technology lease and a pending issue with flood insurance coverage.
Why it matters: The audit and budgetary items shape the district’s fiscal position going into the new school year. Committee discussion touched on fund balance levels, planned capital projects, and insurance exposures that could affect the district’s risk and budget.
Audit and fund balance: Bob Kaufman of Withum Smith and Brown presented the audit and said the district received an unmodified (clean) opinion. Kaufman summarized that the general-fund budget-to-actual variance showed a planned spend-down of about $11 million but actual spend down of roughly $2.6 million, producing a positive variance of approximately $8.4 million. He reported a committed capital-projects fund balance of about $29.8 million and an unassigned general-fund balance of about $9.7 million; he noted the unassigned balance is below an 8% PDE threshold but that total fund balance meets the Government Finance Officers Association (GFOA) guideline of roughly three months of expenditures.
Capital reserve transfer and tech lease: Finance staff asked the committee to authorize placing a motion on the May board agenda that would permit a transfer to the district’s capital reserve after the audit is completed; staff said the previous year’s transfer totaled $3.2 million and that the exact transfer amount for 2024–25 would be determined after audit close. On a separate item, staff recommended not entering a new multi-year technology lease because paying cash upfront would save net interest expense versus a lease with variable rates; the committee supported moving that recommendation to the board.
Insurance and flood coverage: The district’s insurance agent issued an RFP and the committee was informed that some carriers flagged flood exposure for district properties. Staff said they are awaiting quotes and further detail from the alternate carrier and the district’s broker; they warned that flood insurance premiums may add several thousands of dollars per million dollars of insured value for properties that carriers deem at risk. Staff will update the committee when additional information is available.
Budget update and next steps: Staff said homestead/farmstead revenue estimates recently rose by “about $400,000,” which will be reflected in the May 22 budget update; the committee discussed tax-rate scenarios and agreed staff will present final options on May 22 and, if necessary, convene again before June 30 to adopt a final budget. Several committee members voiced support for paying for smaller purchases with cash rather than using a lease if it saves the district money.
Ending: The committee directed staff to bring the completed audit, a recommended capital-reserve transfer amount (if any), updated insurance quotes and finalized budget scenarios to upcoming meetings for board consideration.
