Auditor gives Southmoreland an unmodified opinion; board debates fund balance and rising debt

Mark Ternley, the district auditor, told the Southmoreland School District board on April 16 that the FY22–23 audit received an unmodified opinion and highlighted a general fund balance of about $4,571,000, a $539,000 increase from the prior year. He said the district’s unassigned fund balance is roughly 9.5% of the current-year budget, above the 8% threshold the state flags for millage actions.

Ternley also explained why the district shows a large consolidated deficit: state pension liabilities (PSERS) must be recorded on the consolidated statement, inflating the long‑term liability figure although the general fund remains positive. "If you look at that PSERS obligation at 06/30/23 is over $37,000,000," Ternley said in his synopsis presentation.

Board members and attendees pressed administrators on the practical effects of ESSER funding winding down. A board member asked whether the audit’s revenue totals included ESSER funds; Ternley confirmed they did. The business manager said some ESSER dollars remain for 2023–24 but warned that the loss of federal pandemic funding will shift costs to the general fund going forward: "once those funds go away, whatever cost that you incurred using those ESSER funds will now have to be paid with your general fund, reserves," she said.

During closing comments a board member raised detailed questions about debt service, citing multiple bond series and what she characterized as a much higher annual debt payment in the coming years. "This big increase ... we're now up to almost $3,000,000 a year for our debt," the member said, urging the board to consider applying assigned fund balance to capital needs rather than borrowing.

Business-office staff emphasized efforts to limit borrowing and to assign funds for capital projects. The business manager said she had proposed moving $600,000 of unassigned fund balance into assigned capital to reduce future borrowing needs and described prior refinancing that secured favorable interest rates for earlier debt issuances.

The meeting ended with a request that debt-service details and related questions be placed on next month’s agenda so the public and board can review documents and answers in advance.