In five years, the Mid Valley School District’s fund balance decreased by more than $2 million, according to a routine state audit released Tuesday.
“With a declining fund balance, high debt service and increasing pension costs, Mid Valley School District certainly has its share of financial challenges on top of waiting for state funds tied up by the budget impasse in Harrisburg,” Auditor General Eugene DePasquale said in statement.
Along with a declining fund balance, the district made an improper payment of almost $14,000 to a former business manager, according to the audit.
Mid Valley, like other districts in the state, saw its fund balance decrease as state funding declined and pension costs skyrocketed in recent years. In 2009, the district had a general fund balance of almost $1.9 million, compared to negative $167,365 in 2014. The district borrowed about $3 million in the fall to pay bills during the ongoing state budget impasse.
The district has also not received any of the state reimbursement expected for the $15.5 million elementary school construction project.
“We’re extremely frustrated with the situation going on in Harrisburg,” Superintendent Patrick Sheehan said.
To strengthen the district’s financial condition, officials have explored ways to reduce expenses, including researching grants and mulling a potential reduction of employees through attrition. The district is focusing on what can be controlled at a local level, instead of what cannot be controlled in Harrisburg, Mr. Sheehan said.
Since 2009, the district’s debt service requirements have more than doubled, from $13.8 million to $33.3 million, due to the elementary construction project. Mid Valley also spent $573,350 in legal fees between fiscal years 2012 and 2015, largely for representation in a dispute with Mar-Paul Construction, according to the audit.
The audit also found that, because of an administration error, the district paid former business manager Joseph Caputo $13,975 for accumulated unused sick days when he resigned in 2013.
Because the business manager did not have a separate employment contract, his benefits fell under the district’s Act 93 Plan. The plan requires an employee to work for the district for 10 years to be eligible for payment of unused sick days. Mr. Caputo worked in the district for five years.
District officials now closely examine every contract or agreement, Mr. Sheehan said.
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