Auditors give Centennial School District a clean opinion; officials warn revenue growth is slowing

Carl Hogan, the district's external auditor, told the Centennial School District board the auditors will issue an unmodified (clean) opinion on the district's financial statements for the year ended June 30, 2025 and found no material weaknesses or significant deficiencies in internal control.

That assurance came during a presentation on the audit scope and financial results. Hogan said auditors use a risk-based approach and rely heavily on third‑party confirmations for tax revenues and general‑obligation debt. He also noted the audit included compliance testing of the child‑nutrition program and that the district's Annual Financial Report has been filed with the Pennsylvania Department of Education.

The finding that requires the board's attention, Hogan said, is a slowing of revenue growth compared with recent years. "Where you were seeing $5 million-plus favorable to budget in prior years, we only saw about $2 million this year," Hogan said, urging conservative revenue assumptions and verification with third‑party collectors as the district plans the 2026–27 budget.

Hogan reviewed several accounting and reporting changes that affected 2025 statements. New Governmental Accounting Standards Board guidance required the district to reassess compensated‑absences liabilities (sick and vacation accruals) using probability-based measures; that increased the recorded liability for compensated absences but was recorded in the current year and did not require restatement of prior balances, Hogan said.

Board members discussed the district's fund balances and the food‑service program. Hogan reported a total fund balance around $30 million, including roughly $15 million in the debt‑service fund and an unassigned/general‑fund balance presented in the materials near $12.5 million. The food‑service program showed a positive net position reported at about $3.3 million, subsidized during recent years with federal and state reimbursements related to COVID and program support. "This program has been historically successful," Hogan said, while noting PDE typically expects districts to avoid large undedicated food‑service cash balances and that administrators should plan capital uses or program investments accordingly.

Hogan said there were no unusual transactions, no significant audit adjustments that remained uncorrected and no disagreements with management. He closed by summarizing governance communications and the audit finalization schedule; the final audit report will be presented to the board at its next audit reporting meeting.

The board asked for additional breakdowns of the food‑service reimbursements (state vs. federal vs. employer retirement components); Hogan said the district could separate the components for committee follow‑up. The board also flagged a $2 million transfer from the debt service fund to the capital projects fund made during the year, and Hogan reiterated standard practice: one‑time revenues are often committed to one‑time capital or debt uses rather than recurring operations.

The board did not take formal votes on audit findings at the meeting; the auditor's final report and any required communications will be presented at a subsequent meeting.