Finance consultants: East Stroudsburg SD posted $10.28 million loss in 2024–25, consultants say long-term tracking will improve budgeting

East Stroudsburg Area School District finance consultants told the committee that the district realized a loss of $10,279,584 for fiscal year 2024–25, a result they said reflects a mix of operational pressures and accounting for capital transactions. "We actually realized a loss in 20 fourtwenty 5 of 10,279,584," a consultant reported.

The consultants explained the gap by separating recurring operating variances from capital and timing items. They said nearly $6 million in bus purchases and roughly $4.45 million in construction paid from ESSER funds increased both revenues and expenditures because of how the transactions are recorded, and that when those capital items are netted out the district came in under budget on operational spending.

Consultants emphasized revenue-side timing effects. The district received a $5.5 million tax‑equity supplement in cash during 2024–25 that, under accounting rules, was deferred and not recognized as usable revenue until the 2025–26 budget year. The consultants cautioned the board that the $5.2 million rental and sinking fund reimbursement and the $5.5 million tax‑equity supplement should be treated as one‑time or timing items when assessing structural health.

On recurring items, the consultants identified several pressure points: charter and cyber charter tuition were about $1.6 million over budget (even after correcting a PDE form error that produced an estimated $1.5 million savings), private special‑education placements ran about $1.2 million over budget, and health insurance costs and anticipated premium increases were described as a continuing risk. Counterbalancing items included $2 million of favorable investment interest and $800,000 favorable vo‑tech tuition variance.

The consultants also described a major compliance and reporting change imposed by the Pennsylvania Department of Education: beginning in 2024–25, district accounts must be reported by building code. Consultant Joe explained that teams added extensions to the district's chart of accounts so prior accounting could be preserved while meeting PDE's building‑level requirements. "When we start to look at the account code structure…some were budgeted by building and expensed by building but others were not," he said, and the work will let the district better compare spending between schools over time.

Board members raised questions about the auditors' management‑representation letter, which includes standardized language listing broad risk areas such as "management override of controls" and potential revenue recognition errors. Consultants and the finance team told the committee that the phrase is a standard auditor template and stressed the audit's unmodified opinion and the absence of material weaknesses or significant deficiencies as the controlling factors. "That is the most important piece…they have an unmodified opinion," a consultant said.

The consultants recommended several next steps: refine enrollment‑based forecasts to improve charter‑tuition estimates, continue monitoring special‑education placements closely, and use the new building‑level reporting to diagnose functional variances (for example, transportation salaries) more rapidly. They also advised caution when projecting future revenue, given the nonrecurrence of some one‑time receipts.

The audit report and AFR will be presented by the district's independent auditors at the upcoming full board meeting; consultants said detailed schedules and the audit opinion are available in the AFR for review. The committee had no further questions and moved the AFR/audit presentation forward to the full board.