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District auditor gives unmodified opinion; board warned of shrinking grants, reserve use and March budget deadline
Summary
Auditor Brian Walder reported three unmodified opinions on the Middletown Township Public School District's 2025 financial statements but noted a $4.4 million use of general-fund reserves and a roughly $3.8 million operating shortfall; finance leaders outlined a tight 2026'27 budget outlook and a March 17 tentative-budget vote to meet the county's March 19 submission deadline.
Brian Walder, a partner who identified himself as an auditor for the district, told the board the June 30, 2025 financial statements received three unmodified opinions: the independent auditor's report, the internal-control/compliance report and the single-audit report for federal programs. "We have an unmodified opinion," Walder said, noting there were no findings or recommendations from the audit.
The auditor and district finance staff also summarized several large-picture numbers for the board. Walder said the district recorded a utilization of roughly $4.4 million in the general fund and an overall operating gap of about $3.8 million that reduced the general fund balance to around $4 million as of July 1, 2024. He added the district's general fund budget for 2025 was roughly $185 million.
The board's finance presentation expanded on drivers behind those figures. Finance committee presenters, summarizing committee discussions, said pandemic-era federal grant revenues that previously offset operating costs have declined (grants dropped from roughly $8.2 million in 2023'24 to about $3.8 million in the current year). The district's four-year average of nonrecurring funding used to balance budgets was about $4.8 million per year and those sources are largely gone, the presentation said.
Finance staff warned health and prescription costs, transportation and inflationary pressures remain significant. The district also reported it is self-insured for health benefits; the self-insurance reserve began at about $5.2 million, was used for about $1.5 million last year and stands near $3.6 million, a level the presenters said merits replenishment.
The board discussed debt service and the multi-year outlook. Presenters said principal and interest payments projected for 2026'27 total about $6.5 million, with approximately 20% (about $1.3 million) expected to be offset by state aid when the district receives final state-aid figures.
Board members were given a timeline for budget actions: staff intend to present the tentative budget for board approval on March 17 so the district can submit to the county office by the March 19 deadline. The district also noted the state's schedule could change under the incoming governor, which might shift deadlines.
Public questions at the end of the workshop focused on the financial report's disclosures. Resident Bernard Doss asked for plain-language explanations about a compensated-absences restatement, the district's reporting of a one-time Port Mammoth property sale and year-over-year drops in plant operations/maintenance spending; he asked for more narrative notes in the ACFR. The board and staff said they would follow up by posting materials and answering questions offline.
What happens next: the auditor's report and related materials will appear on the voting agenda for formal acceptance, and the board expects a tentative budget vote at its March 17 meeting to meet the county submission requirement.
