Auditors give Keystone Central School District "unmodified" opinion, note one significant deficiency

Baker Tilly presented the results of Keystone Central School District’s single audit for the year ended June 30, 2024, telling the board the firm issued an “unmodified opinion” on the district’s financial statements and on compliance for its major federal program, the ESSER COVID funds.

The auditors said the district’s general fund balance rose by about $1,300,000 to roughly $21,000,000 at June 30, 2024, after total general-fund revenues of about $90 million and expenditures near $87 million. Baker Tilly noted that general-fund expenditures exceeded the final budget by about $1.9 million (roughly 2.2 percent), and that a large driver of that variance was higher-than-expected cyber charter tuition payments.

The audit team reported one finding described as a “significant deficiency” in internal control over financial reporting. John, a Baker Tilly auditor, said the deficiency related to proposed audit adjustments involving lease arrangements, capital-asset records and accrued medical claims; management agreed to the adjustments and posted them. The auditors said none of the proposed adjustments were material to the financial statements but that professional standards require reporting them to the board.

Board member Elizabeth pressed the auditors for more detail on the causes of the adjustments and on a sentence in the summary that tied the budget miss to increased cyber charter tuition. John told the board the audit summary could be worded more precisely — for example, “in part due to increases in cyber school tuition payments” — and said auditors can provide the adjusting journal entries to the business office and the board on request.

Baker Tilly also reviewed key financial metrics: roughly 43 percent of general-fund revenues came from local sources, about 49 percent from the Commonwealth, and about 8 percent from federal sources. The auditors described the composition of the district’s fund balance (committed about $11.7 million; assigned about $6.9 million) and compared available fund balance with a Government Finance Officers Association guideline of two months’ typical operating expenditures (approximately $14.8 million for the district’s 2024–25 budget). The district’s total fund balance exceeded that two‑month guideline.

The auditors flagged the district’s proportionate share of the Pennsylvania School Employees’ Retirement System (PSERS) liability — about $97 million at June 30, 2024 — and noted the district’s FY2024 PSERS contribution was about $11.4 million. Baker Tilly said contribution rates have fluctuated and project to rise (the auditors noted a projected 37 percent contribution rate in 2028 in their commentary).

Auditors said they will issue a short audit results document with required communications soon. Board members requested the final audit report and asked Baker Tilly and district staff to provide greater detail about the finding, including the adjusting journal entries and clearer wording in the summary about charter tuition drivers.

Asked about root causes, John told the board that while turnover in business-office positions has in prior years contributed to control weaknesses, Keystone Central’s business office had greater stability during the audit year and that 2024 showed improvement from the prior-year material weakness. The auditors said the draft report remains in final closeout and should be available in the next few days.

Ending: The board left the audit discussion open for follow-up: the auditors agreed to provide the adjusting journal entries and the district will circulate the final audit report when issued so the board can request any additional detail at a future finance-committee meeting.