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Kutztown Area SD audit returns clean opinion; board warned of charter-driven budget pressure
Summary
An independent audit gave Kutztown Area SD an unmodified (clean) opinion for 2023–24, but the district recorded a use of fund balance and administration warned rising charter and out-of-district placement costs drove recent budget deficits.
An independent auditor told the Kutztown Area School District board on Dec. 16 that the district's 2023'14 financial statements received unmodified opinions, but board members were warned the budget remains strained by rising charter and out-of-district placement costs.
"An unmodified opinion is a clean audit opinion that's the highest level that can be issued for the audit," said Nick Bieber, senior manager with Irvine & Company, during his presentation of the audit findings. Bieber said auditors found no internal-control or compliance issues in the areas tested, including the federal education stabilization funds.
Bieber summarized the district's fiscal results for the year: total general-fund expenditures exceeded budget by roughly $1.3 million (about a 3.6% variance), driven primarily by charter-school costs that he said "came in about $1,200,000 over budget and almost a $700,000 increase over the prior year within those special programs expenses." He said the district used fund balance for the year, leaving an ending unassigned fund balance of about $2,678,000, which the auditors characterized as within the policy range but reduced compared with prior years.
Superintendent (speaker 6) told the board the district faces continuing pressure from cyber-charter and other out-of-district placements and urged legislative fixes to the funding mechanism. "We have received approximately a $100,000 this year" from a transition fund tied to charter funding reform, he said, but added that broader funding changes are needed to prevent recurring budget stress.
Bieber noted the district had a one-time cash influx during 2024'5 from an administrative building sale that will provide some near-term relief, but he emphasized the board should continue close budget monitoring. The auditor also recommended updating the district's capitalization policy to align with the federal uniform-guidance threshold.
Board members asked questions about the charter-cost drivers and the composition of the fund balance. Administration said that while the district's position excluding pension and OPEB liabilities shows a positive operating position, the planned multi-year use of committed reserves was expected and should be actively managed as the 2025'6 budget is prepared.
The board accepted the audit presentation and had no audit findings requiring corrective action; staff will provide follow-up documentation as part of the finalized audit package.
