Delaware Valley SD audit: clean opinion, $1.6 million general-fund gain; pension liability remains large

Paul Murphy, the auditor who led the district's 2023-24 audit engagement, told the Delaware Valley SD Board of Education the audit produced an unmodified, or "clean," opinion and that the district finished the year with stronger-than-budgeted results.

Murphy said the district recorded a $537,050 positive revenue variance versus the final budget and spent about $1,061,052 less than budgeted in total expenditures, producing a net increase in the general fund of $1,598,102. "This is an unmodified opinion for financial position in accordance with generally accepted accounting principles," Murphy said during the presentation.

The auditor outlined how the district allocated its roughly $20 million in total fund balance at year-end. The board has designated funds for near- and long-term needs including a retirement reserve (about $6.6 million), compensated-absences funding (about $2.3 million) and an OPEB/GASB 75 reserve (about $9.7 million). Murphy noted roughly $1.72 million remained in unassigned fund balance; the board has debated whether to transfer some or all of that amount to capital reserves.

Capital projects and food-service activity were also summarized. The capital projects fund reported about $2.9 million in spending during the year on items such as a high school roof project and stadium lighting and scoreboard upgrades; the capital reserve held roughly $8.2 million at year-end. The food-service fund improved, in part because of federal supply-chain assistance and a state free-breakfast program, growing from about $98,613 to about $447,534.

Murphy emphasized the scale of the district's portion of the state's underfunded pension obligation, which he characterized at about $120 million. He reported the district's total payments to the state pension program this year were in the range of $14 million to $15 million and said the employer contribution rate for the district stood at about 33.9 percent for the audited year (budgeted to return to 34 percent in the following year). He also noted that the state reimburses the district for roughly half of that gross pension expense.

The presentation noted there were no material weaknesses or significant noncompliance issues reported in the audit. Murphy and others on the dais said the district had tracked its federal ESSER (COVID-relief) spending and had undergone federal monitoring and audits tied to that funding.

Board members asked clarifying questions during the discussion. One board member asked whether additional payments above regular pension contributions would be applied to Delaware Valley's local portion of the state fund or to the statewide pool; Murphy said he would research that point and report back. The board also reviewed the procedural history of a fund-transfer motion: attendees said a motion to move surplus funds to reserves was passed at a previous meeting without a dollar amount specified, while an earlier transfer motion had failed in October. No formal acceptance of the audit report was recorded during this meeting; the report was scheduled for formal acceptance at an upcoming board meeting.

The auditor closed by praising district leadership for their financial stewardship. "I think Delaware Valley was able to navigate through another strong financial year," Murphy said. Board members thanked the auditor and staff for their work.