Audit partner reports positive year, identifies internal control weakness in district—s financial statements

Peter Vancheri, the audit partner on the district engagement, presented a condensed summary of the McKeesport Area School District—s 2023-24 audited financial statements at the March 6 meeting and reported that the statements are "fairly presented, in all material respects, in accordance with generally accepted accounting principles."

Vancheri said the district—s governmental funds combined fund balance as of June 30, 2024, was $24,537,000, with roughly $17,000,000 assigned (including about $3,000,000 assigned for future capital projects). He said the general fund balance represented approximately 7.6% of budgeted expenditures while the overall fund balance was about 28% of budgeted expenditures.

The audit partner reported total revenues of about $94,070,000 and expenditures before other financing uses of about $74,000,003 for the year. Transfers and other financing uses totaled about $11,000,000, including transfers to the debt service fund and $2,000,000 the board had authorized to move to the capital projects fund. The district—s change in fund balance for the year was a positive $8,000,000, compared with a budgeted increase of about $3.9 million.

Vancheri identified several reasons revenues exceeded budget: interest earnings were roughly $1 million higher than budgeted, an unbudgeted contribution from Dick—s Sporting Goods of $1,000,175, and a basic instructional subsidy that came in about $2,300,000 over budget. He noted that a portion of revenue in 2023-24 reflects ESSER (federal) funds that will not recur.

On expenditures, instruction made up about 59% and support services about 23% of total spending. The audit report also covered other funds: the district paid $9,800,000 in principal and interest from the debt service fund in the year, the food service fund recorded a positive change in net position of $137,000 for the year (compared with $520,000 the prior year), and the district had outstanding pension-related liabilities (reported share of net pension liability of $74,826,000 at June 30, 2024).

Vancheri said the single-audit portion (required because federal expenditures exceeded $750,000) covered three major programs for additional testing: the Education Stabilization Fund (ESSER), the special education cluster and the 21st Century program.

The auditors reported one material weakness in internal control over the financial statements related to bank reconciliations and review of liabilities, Vancheri said. The auditors also described other disclosures and footnote changes, including new accounting treatment of subscription-based information-technology arrangements and lease liabilities.

Vancheri said the draft report is available and that the final statement will be issued after completion of a few remaining items. The presentation was informational; no board action was taken at the time of the report.

No specific statutory citations or corrective orders were presented during the board discussion.