Peters Township School District’s financial statement earns high grades
Peters Township School District’s 2016-17 financial statement has earned a “clean opinion,” the highest level that can be awarded, from auditor Hosack, Specht, Muetzel & Wood LLP.
“We’re saying that these financial statements are fairly presented in all material respects,” firm manager Stephen Niedenberger told the school board during its Feb. 5 finance committee meeting. “But it doesn’t speak of how sound your budgeting is, and it also doesn’t speak to how strong or weak you are financially.”
As a certified public accountant who has examined the books, though, Niedenberger did provide some reassurance.
“Peters Township, if you look at the financials, is very strong in a number of areas,” he told the board. “Even with the negative net position, that is fairly common now with school districts because of the pension liability.
He was referring to the Pennsylvania State Employees’ Retirement System’s unfunded liability, which exceeds $50 billion and presents districts throughout the state with unrelenting financial challenges.
In Peters Township’s case, the district’s net position as of June 30 was $72.1 million in the red. Total liabilities were $168 million, of which $106 million represents the overall PSERS obligation based on actuarial determinations.
“This is really what will be paid out to all of your teachers when they retire, and all of your other support people and administration,” Niedenberger explained. “That does go up every year.”
For example, the PSERS liability – school board member William Merrell called it an “unfunded mandate” – in the district’s 2015-16 financial statement stood at $96 million.
“That additional $10 million,” Merrell said, “can’t be spread around by just pinching pennies and things.”
Niedenberger pointed out that for 2016-17, the district showed a net gain of $251,299 in its fund balance, or available financial resources, over the previous year.
“One of the reasons the school district was able to have that positive result at the end of the year was because the expenditures came in about $915,000 less than they were budgeted,” he said.
The fund balance in the district’s general fund stands at $10.8 million, of which $8 million is assigned for particular purposes: $4 million each for future debt service and future increases in PSERS obligations. Policy calls for the district to strive to maintain an unassigned general fund balance of at least 5 percent of the budgeted expenditures for a fiscal year.
Under the provisions of Governmental Accounting Standards Board Statement No. 68, implemented in 2015, each school district is required to report in its financial statement the amount of its proportional share of the collective liability provided by PSERS. Prior to that, no pension liability was reported if a district fully funded its required annual contribution.