In the wake of last year’s state audit that highlighted two major financial trouble spots, Lehighton Area School District officials have been asked repeatedly how they will ensure a similar scenario doesn’t play out again in the future.

While the district again Monday night highlighted what it is doing in response to the audit, LASD finance committee chairperson Rita Spinelli said nobody could ever make guarantees.

“I’m not sure how you guarantee that at any point someone, whether it be administration, a board member or someone checking things couldn’t miss something or give completely false information that decisions are based upon,” Spinelli said. “I’d love to say it will never happen again but having worked in accounting for years, nobody can say that.”

Audit findings

Lehighton Area School District’s general fund balance, Pennsylvania State Auditor Eugene DePasquale said, dropped at an alarming rate during the audit period, falling from approximately $14.2 million as of June 30, 2015, to $874,439 as of June 30, 2019. This, he added, was largely due to the district’s failure to budget for capital expenditures coupled with the costs of borrowing $62 million to consolidate and renovate school buildings.

According to the audit, the district also spent millions of taxpayer dollars on a private education contract that district officials had mistakenly believed would be achieved at no cost. The contract was to create Science, Technology, Engineering, and Math academies at the elementary, middle, and high schools. In reality, the complex contract with the National Education Foundation ended up costing the district over $3 million.

Superintendent Jonathan Cleaver said Monday the board is now provided with bank statements and additional financial reporting to include monthly reporting of both revenues and expenditures. Cleaver reviewed a response to the auditors and a document of corrective steps, which is available on the district website, during Monday’s finance committee meeting.

Corrective action included “having former Business Administrator Patricia Denicola provide fund balance training to the board, provide the board with a multiyear comparison of the district’s actual versus budgeted expenditures and revenues, and developing 2019-20 and 2020-21 budgets based on actual expected costs.”

Denicola, according to the audit, also ensured that the district’s requests for PlanCon reimbursements were brought up-to-date, Lehighton had a number of instances in which PlanCon reimbursements were not appropriately filed in prior fiscal years. Denicola addressed incomplete filings related to prior years totaling $1,777,049.82 in PlanCon reimbursements.

Also located on the district website are parts of meeting minutes dating back to 2018.

Going back to a finance committee meeting on April 9, 2018, Brian Feick, Lehighton’s business manager at the time, presented the board with a five-year general fund revenue and expenditure projection. The district had expenditures of $41,478,220 in 2017 and $6.52 million in the fund balance at the end of that year.

Shortfalls

According to Feick’s projection, the district would have expenditures of $41,841,721 in expenditures in 2020 and still have $3.86 million left in the fund balance at the end of the year. The projection didn’t have Lehighton falling behind the $1 million mark in fund balance until after 2023.

Eight of nine current directors, including Dave Bradley, Larry Stern, Joy Beers, Wayne Wentz, Gail Maholick, Rita Spinelli, Richard Beltz and Stephen Holland, were in their seats on the board and unanimously voted to approve the 2018-19 district budget, which called for an estimated $203,000 use of the fund balance.

In early 2019, Feick projected no tax increase for 2019-20, a 3% increase in state funding and a use of $300,000 from the fund balance with a plan to get that number to zero by the time the final budget was passed in June of that year.

Denicola took over for Feick in 2019 and during a budget presentation on June 3, 2019, Director David Bradley asked why Lehighton was $1.8 million over budget for 2018-19.

“Medical claims that were paid from July (2018) through March (2019), totaling $3.5 million, should have been shown as an expense on the books, but were not,” Denicola said.

Denicola added that the expense should be shown every month, but she couldn’t speak to what had been done in years prior.

As a result, the estimated $203,000 deficit that board members had approved as part of the 2018-19 budget ended up being a $1.77 million deficit when the 2018-19 audit was returned.

“Yes people can miss things,” Lehighton resident Barbara Bowes said Monday following Spinelli’s comments on avoiding the audit issues in the future. “I have no issues with someone making a mistake, but I do have a problem with people neglecting their duty and not looking.”

The news regarding last year’s state audit, Cleaver said, wasn’t all bad. He pointed out Monday that there were no findings regarding the district’s transportation operations, Right To Know compliance and payouts for employees who separated from the district, which had been a finding on a previous audit.