Audit review flags ESSER accounting quirks, board hears $1.6M in cyber-charter tuition costs

The Montoursville Area School District board on March 12 reviewed an audit for fiscal 2022–23 that officials said is unusually affected by COVID-era federal grants, prompting detailed questions about how ESSER funds were used and why cyber-charter tuition costs have risen.

Business manager (Speaker 9) told the board the audit shows the district was ‘‘1,731,551 overspent’’ in accounting lines that include a $1.7 million transfer made May 23, 2023, from the general fund to the capital fund. He said that without that transfer the year would have shown a deficit of $31,551. "So if we wouldn't have done that transfer, it would have showed a deficit of $31,551," Speaker 9 said. The business manager also pointed to unexpectedly strong local revenue this year — driven by earned-income tax and higher investment returns — and to grant and refund items that altered the revenue picture.

Why ESSER was in focus: Several board members asked whether federal ESSER funds were used for recurring salary costs. Speaker 5 asked directly, "Did we pay salaries with ESSER funds?" and said, "We weren't supposed to do that, were we?" The business manager responded that some ESSER-coded expenditures covered salary lines in prior years and that federal guidance allowed certain uses but that it was "not a good practice". "They said you can do it. Not a good practice," Speaker 9 said.

Charter and cyber tuition costs were another major point. District staff reported roughly 76 students enrolled in cyber programs in 2023–24 and roughly 106 reported as home-school; the board was told cyber tuition and specialized outplacements contributed roughly $1.6 million in excess spending over the year. "That million dollars is in addition to what was budgeted," Speaker 3 said, explaining high costs for outside placements and specialized services. Board members discussed local options to reclaim students — including dual-enrollment, in-house credit recovery and targeted social supports — but staff cautioned that some families prefer cyber options for social or other reasons.

What the board will do next: The business manager said the audit will be followed by a deeper revenue review at the next meeting and a later detailed look at expenditures once remaining data arrive. The board asked staff to prepare clearer account-level tieouts and to return with counts and grade-level breakdowns for charter/cyber and homeschool enrollment so trustees can explore strategies to reduce tuition outflows.

The board took no new policy action during the audit discussion; members emphasized a need for clearer accounting practices and for follow-up reports on ESSER coding and charter enrollment trends.