Accountant: Armstrong School District surplus is legitimate

MANOR — For the second time in two weeks, the accounting firm hired by the Armstrong School Board to determine why a $4 million budget surplus appeared at the end of the 2008-09 school year told directors Monday night there was no wrongdoing on the part of the administration.

When director Joe Close asked if there had been any deception by the administrators, accountant Edward Gardener of Case/Sabatini, said, "There was no reason to think that."

"I am absolutely convinced that there was nothing unusual going on when I looked at the reports. The money wasn't hidden and then suddenly appeared," he told directors. "The information was available to you in the monthly reports given to the board; however, the information was part of a larger package of numbers."

Gardener did recommend that the business manager provide a more concise monthly report to directors detailing the budget figures and actual revenues and expenses.

"At least three times a year, the administration, business manager and board should sit down and have an in-depth discussion concerning the budget numbers and the actual numbers," Gardener said. "That allows for more details to be provided and a better understanding of how things compare."

Gardener did say he felt that had the discussions taken place through the budget year in question, the district would have known to expect a surplus.

Superintendent William Kerr said the district was in a transition at the time of the review of the budget. The business manager who created the budget had left and the district had brought in an interim business manager.

"We have always felt that we used prudent judgment in developing the budget and we work hard to make sure our business affairs are in good order and that we are accountable to the taxpayers," he said. "The auditor's report coincides with a report I gave last fall, saying that cost-saving measures and prudent financial decisions helped allow us to have a surplus."

After Kerr's remarks, director Jim Solak asked Kerr who was responsible for notifying the board of the surplus.

"Dale Kirsch planned the budget and Dr. Stephen Vak prepared the following budget," he said. "If Kirsch wasn't responsible for it, who was?

Kerr countered by asking Solak who he was "pointing the finger at to blame," but board president Rose Stitt banged the gavel, ending the discussion before Solak could answer him.

The board had approved spending up to $4,000 on the audit review, however, as of Monday the auditor had not yet billed the district.

Next fiscal year

Along with talk of the $4 million surplus, business manager Eric Brandenburg reported the district has been working on the 2010-11 budget, which will be presented in May.

Based on discussions with the state education department, Brandenburg said, the district will see only slight increases or no changes in state subsidy for the upcoming school year.

"With the projections given by the state, we are looking at a total revenue increase of $777,121 for next year." he said.

Increases in expenses for the coming year also were detailed, including an $840,000 increase in medical insurance rates, a $715,000 increase on retirement contribution rates, $1.2 million in contracted salary increases, a $587,000 decrease in salary due to 12 retirements and a $280,000 thorugh the elimination of two administrative positions. The positions were not identified.

Brandenburg told the board, "The current budget outlook is the same for the next few years — minimal increase in state funding, limited growth in local tax base and declining enrollment. In order to avoid reliance on using the fund balance, a combination of raising real estate taxes and reducing operating costs is inevitable."

He went on to say that he and Kerr recommended "taking a pro-active and conservative approach by doing more with less, or in simple terms, cutting programs and reducing the work force are strong possibilities in the future."

One cost-cutting measure discussed Monday was the possible closing of Kittanning Township Elementary School.

Brandenburg said the expenses for the current school year are $1.7 million for 178 students. If the school were to close, the savings to the district would be $801,987. The remainder of those expenses would go to staffing at Elderton Elementary School to educate those students there.

Stitt said she was emotionally attached to the school and has fought over the years to keep it open, but said closing the school would help provide stability for the students in that area.

"I was never in favor of pulling the Plumcreek Township kids out of that school and sending them to Elderton and begged for an explanation as to how doing so would be educationally beneficial to those students," she said. "As hard as I would fight to keep it open, someone will come along again and try to close it. I just want stability for the people of the area and give the kids a good education."

The board has voted on whether or not to close the school at the end of this school year.

Prior to Monday's agenda-setting meeting, the board held a short meeting to enter into a contract with L. Robert Kimball and Associates, an architect firm in Ebensburg. With no discussion on the specifics of the contract, directors Stitt, Jim Solak, Royce Smeltzer, John Monroe and Sara Yassem voted "yes," while directors Joe Close and Chris Choncek voted "no". Directors Jim Rearic and Mike Markilinski were absent.

Solak asked that the architect attend next week's scheduled meeting to allow for further discussion of potential construction or renovation projects.