Jan 23, 2017 3 min read

McMURRAY – Although Peters Township School District received a favorable audit report, school board members are expressing concerns about financial implications for the future.

At last week’s board meeting, certified public accountant John Zivkovic of Hosack Specht Muetzel & Wood LLP reported his firm’s issuance of an unqualified opinion with regard to the single audit for the 2015-16 school year, meaning “we gave district a clean bill of health.”

A single audit examines financial, internal control and compliance of a nonfederal entity that administers federal assistance money.

While filled with positivity, Zivkovic’s report led to a discussion about the district’s relative financial position if the state’s so-called Property Tax Independence Act goes into effect.

Now in the form of bills in the state Senate and House, the legislation seeks to replace school district property taxes and supplant them with other revenue sources, such as increasing the state personal income and sales taxes.

In turn, the great majority of funding for all public school districts would come directly from the state, and that would represent a sharp turnaround for Peters Township. According to the 2015-16 audit, the district took in more than 75 percent of its revenue, or $44.7 million, through local sources, with real estate taxes accounting for 81 percent of that amount.

“They would divvy out based on cost per student and whatever ratio they come up with,” Thomas McMurray, school board president, said about the state’s role under a new funding system. “So, we would essentially lose pretty much all control of what we would have and what we can do in our district.”

Lisa Anderson, the board’s representative to Pennsylvania School Boards Association, talked about the possible effects.

“We are going to be at the beck and call of a state government, who is going to choose how much money we get,” she said. “And if we want to do a special program and they’re not going to give us money, we can’t do the special program.”

Expressing further concern was Jamison Hardy, chairman of the school board’s finance committee.

“If the state pulls one of these stunts where they don’t pass a budget and we don’t get our revenue, we would be in a major world of hurt compared with where we are today, because of the heavy emphasis we have on property taxes,” he said.

For example, Peters Township weathered the budget impasse of 2015-16 by using its fund balance to cover costs, in contrast to districts that had to borrow to continue operations until money from the state finally was available. The audit lists the fund balance, representing the district’s surplus, at $10.6 million as of June 30.

The document also shows that revenues and expenditures both came in at slightly less than what was budgeted for 2015-16.

”That tells me the school board passes realistic budgets and lives within those budgets,” Zivkovic said.