call this meeting to order for the uh September 11th, 2025 finance meeting. Uh roll call, please. >> Present. >> Present. >> I did not hear back from >> I have not heard from him. >> All right. >> All right. Um approval of the agenda for the meeting. So moved. I will second it. favor. I I move forward. Um approval of the minutes from the June 12th meeting. Move that as well. I will second as well. So we'll move that forward. >> Thank you very much. You guys make a good team. >> Yes. Very efficient, very productive. >> Um so we have a rather short agenda today. Um I have Carl Hogan will be online. will present the audited financial statements uh or share his his thoughts on the audited financial statements from uh 232 24. So this is a year ago's financial statements um and uh he'll do that then on the September 30th we'll bring those statements forward uh for the board's acceptance and we'll post them online once that's been done. >> Okay. >> Okay. And the second item is the refinance update. Uh so I we have some uh good news surrounding that. Um and you know I think it all happened a week ago when when the jobs report came out. So sort of the negative news there >> got the revisions the uh the long-term view >> which is really what drives drives our our rates. >> So uh we will get started with Carl here. All right Carl can you hear us? Yes, I can hear you. >> Excellent. You hear me? Okay. I can. I can. >> Um, so I uh I'm turning it over to you for sort of the uh the audit review and then uh when you're done after any questions, we'll have administration sort of leave the uh leave the room and uh allow for discussion um at that point. Okay. >> Yep, sounds good. Can you see my screen? What? >> I'm sharing my screen. >> Yes. >> Okay. >> Yeah. First and uh foremost um I'd like to number one apologize that it is September 2025 and I am uh you know uh presenting the results of the June 30th, 2024 audit. I just don't I mean the most important thing is whatever is that it doesn't reflect bad on Tom and his team. um they've done everything that we've requested. Um I'm sure Tom shared a little bit with you. Um the transition that happened last year that was kind of negligent in a way. I'm sure Tom uh when we went through our original merger back in April of 2024, a firm acquired another firm with a significant state and local government practice with none of their own. Um it's created a lot of havoc for me, my clients, the state and other um you know stakeholders um within the school district and uh you know I was happy that um with them uh approached CLA um knowing that they weren't shouldn't have been doing this type of work. Um you know we could talk a little bit further after I do my little presentation. Um but CLA is um you know the large largest state and local government practice in the country and they are very committed to the to the practice and would like to you know enhance their foothold in uh you know the Philadelphia region. So um that's where kind of where we stand now. Um once we got the CLA, we were able to engage competent personnel that was able to work with Tom and turn this around pretty quickly. And we're going to have that same team um for the upcoming audit. Um indep So I'm just going to be real quick. I mean, the audit's supposed to be historical, but not this historical. But um I obviously I'm going to present this here today. I'm going to come to the September 30th board meeting and once again um in a public forum kind of reiterate what I just said just because um you know number one I don't want it to reflect badly on management or the board um the untimeliness of this document. Um so here we go. Independent auditors report June 30th 2024. The good news is um the the district continues to trend positively with respect to their financial position. Um you know um we've gone through a time period here where the district hasn't been able to um put themselves in a position where makes their makes you know management and the boards even though you may not seem it's easy all the time in a better position as you move forward in subsequent budgets. But ultimately what we want to focus on here is the numbers that presented to us by um the man or the business office or uh the district for the year end of June 30th, 2024 were fairly presented. Um no significant journal entries. Um so what was ever presented back um for June 30th, 2024. What was reported to the state is being reflected within the audit report um here um today. Um nothing has changed within the audit report. other um management's responsibilities are still the same. Our responsibilities are still the same. Like to just highlight um required supplementary information and we're going to go over a piece of this with the budgetary comparison schedule. Um but also I'd like to point out the management's discussion and analysis. Um you know I know everybody's not advanced user of the financial statements. So, I kind of focus on um um people that aren't advanced users could focus on this to kind of get like a narrative form format of um 2023 2024 um what's happened from 2023 2024 to date and just kind of gives you the opportunity to um kind of segue what's happened in between then and when the the issuance of this report. And we'll go over the budgetary comparison schedule again um shortly. And then the supplementary information um consists us in combining an individual fund financial statements um and also the schedule of expenditures of a federal awards and we'll go over that um shortly in terms of um your school district expends in excess of $750,000. Um now the threshold is a million and you'll be well above that and then we'll have to get a single audit. Um but once again, the district um uh had an un unqualified or unmodified uh opinion on compliance and an internal control related to its federal awards. And we'll have that in the summary in the back. And then we have the final paragraph here basically stating um that the audit was performed in accordance with government audience standards. And then we have the report on summarized comparative information um basically indicating what responsibility that CLA is taking for the comparative information in the audit report. So here's the good news. Um general fund um same theme as in previous years little bit different than in uh previous years in terms of the local sources. Um once again I think we always talk about that theme of hey we want to be conservative with our revenues. Yes we know that um those revenues that are highly volatile associated with earned income taxes, transfer taxes, they could change on a dime in any given year and put the district in a bad position if they're not conservative. The good news is even we continue to see an upward trend in earned income taxes. It's slowing, no doubt about it. It wasn't like it was a couple years ago, but we continue to see a better than anticipated um uh earned income taxes being received on an annual basis. And the change here is where we kind of saw the transfer taxes. They're kind of falling off, but now we have the earnings on investments. And I'm I'm thinking we're going to see a fall off on that um going forward 24 25 and then 25 26 as the um federal funds rate is reduced and just like in other years your state sources and federal sources are typically within budget. I mean I know we had some timing issues with the esser money but now that's all gone. I know there's some issues with the state and with increases to basic and special ed funding in the previous year but for the most part those monies are spot on in terms of your budget on an annual basis. Um, as we come down to expenditures, as in any given year, um, you have some ups and some downs. You, you know, there's things that you anticipate at the beginning of a school year, and a lot of things happen during a school year. But ultimately, what we want to focus on, um, is this number down here, total expenditures, almost within a million dollars of the $140 million budget for the year. Um, once again, I think we've highlighted this in the past, the special programs expenditures. This is ones it's hard to get a handle on sometimes. um you know you could develop a budget with their special education program in any given year and then there's out of district placements um you know things with the IU that kind of put a wrench in things. So I know Tom um has been working on developing and you know strategies in terms of kind of tightening that but overall um that special ed program expenditures is you know tightening in terms of the delta between what is budget and what is actually spended in during the given year. And then down below your support services, the fluctuations there. Um, as we come down, um, you had some savings uh, with your debt service during the current year as well. And then other financing sources uses. As you can see, you were able to transfer out $3 million more dollars over to the debt service fund to help subsidize or to smooth out future debt service payments. But I think the key to take away here is that that $3 million is one-time uh revenue associated with better than anticipated revenue. So your expenditures are right in line. Um but you know this is gives you the ability to put some money away um for future uh debt service expenditures. We'll kind of talk about the particulars of the debt service fund and the flexibility it gives you in relation to um you know maybe sub or smoothing out future debt debt service payments or you know transfer overreach to the capital reserve fund if um capital projects are needed. Um, so overall after the $3 million transfer, you had a slight decrease in your fund balance and you're keeping your fund balance within that 12.5 um, range, which is in the within 5% of your next year's expenditure budget as allowed by PTE. Um, the next page down, um, this the same information I just presented for the general fund, but in addition, we have your capital project fund. um your capital projects fund, the actual bond monies have uh uh kind of winded down and now you just have some capital reserve money that's been put aside. But your debt service fund over here on the right hand side is um you know monies that you've been able to put away related to um better than anticipated revenues over expenditures within the general fund over the past couple years. And I think we talked about this before. Um, you know, every school district has, you know, capital needs. Um, and you could reserve those funds within the, um, general fund or commit those funds within the general fund or, um, you could transfer them over to the capital reserve fund. But once you transfer monies over to the capital reserve fund, there the state does not allow you to transfer them out of the capital reserve fund. Um, so Tom came up with the strategy um, with the board in the past. Hey, let's put the money over in the debt service fund. We could always use those money to smooth out future budgets when we need it. In addition, you're allowed to transfer money over from the debt service fund to the capital projects fund. So, I think it was a good strategy where you're getting the money out of the general fund, but at the same time, um it gives you the flexibility to number one use it for debt service or to use it for other needs, other one-time expenditures such as capital projects. Um so um there's where um the school district lies, where it stands with its general fund, its capital projects fund and debt service fund and you know more good news for the board as it allows it more flexibility as it goes into future budgets. Here is the balance sheet. Um the balance sheet governmental funds um this is just um your current assets over your current liabilities. I know there's a lot of information this auto report that looks at um the non-current um liabilities and assets, but when you're putting developing your budget on annual basis, this is what you want to focus on. What's our current assets? What's our current liabilities? What's the excess over the two that we can use to further um to uh you know to incorporate into future budgets. Um so obviously the biggest um asset of the uh the district is its cash and investments. Most of the investments are in liquid form in terms of pistol. Um they could easily be um turned into cash to be used. And then the other biggest asset um that you have here are your taxes receivable and your amounts due from other governments. Primarily most of the stuff due from other governments is from PTE for reimbursement amount. So a lot of the liabilities that we're seeing down below um will be reimbured with that amount from due from other governments. So they kind of offset each other. The biggest being the Pasers quarterly payment um that is paid um in September every year. So you get the reimbursement from the state that's receivable and then the payable on the other side. Um as we come down and we look at your liabilities, your accounts payable. Um you always have accounts payable. There's always bills that come in after year end, and that has remained consistent year-over-year. Um there's goods and services that the district um receives in May and June, but they don't receive the bills until July and August. We have to acrew those amounts back. And the other biggest liability of the school district is their acred salaries and benefits. So, if you think about it, the teachers work through June 30th, but they get paid through August. um their um earning uh retirement benefits through June 30th and that's what that represents. So that represents anything that was earned and paid out through July and August and in the case of the Pasers payment September. So it's a it's a little bit of a number but we want to capture what was earned as of June 30th um in the June 30th 2024 financial statements. So as July and August um go on um that liability is reduced with the cash position you have on hand um as of June 30th. Um, as we come down below, um, the fund balances, um, we have that breakdown that we were just talking about on the previous page. Assets over liabilities in the general fund. You there's that $12 million of which $10.1 million is unassigned and that's within the 8% like we talked about. Um, but also you have that $2.5 million employer retain retirement rate stabilization that's been holding steady. The board hasn't done anything with it um, recently. So, um, you know, uh, you have some flexibility there. The rate has remained constant. It has kind of ticked down a little bit. Um, you don't know what the future's going to hold. If you need it, etc. It's good to have it in your back pocket in case the rates do um, start to um, go up a little bit. Um, but that's always been put there just in case um, there has been was another spike within the PERS rate and then you could smooth out any kind of increase um, in your future budgets. um capital projects fund. Um just like it's um said, it's $2 million that's restricted in the capital reserve fund. And then the debt service fund um that's committed to at this point it's committed to debt service and can be uncommitted by the board um for other one-time purposes um such as capital in the future. Um, I'm not going to go through all the food service statements, but what I do want to point out is good thing with COVID is it has allowed all the school a lot of my school districts to reset um with their food service fund. I think Centennial has always done a pretty good job even before CO. Um but um it's allowed um you know the school district to accumulate a positive net position within its uh food service fund um just because of all the incentives that were related to um co and the extra monies that were received by the food service fund. So once again during the current year we had a positive change in net position of almost $778,000. Um, that being said, um, I don't know if Tom's heard or the food service department's heard. Um, the state will, um, you know, kind of be like, hey, you have too much net position or too much fund balance. So, um, that might be something Tom and his team need to work with the food service department to see, you know, what, you know, can these monies are excess or what the state would consider excess fund balance in that position. Um, a lot of times they could be allocated towards capital um, food service projects. And then finally um just to talk about I talked about um you know this is the final results of the audit. So number one what kind of audit report we had. We had a clean on report um what's the financial position of the district um which the district is in good financial position has been improving over the past couple years. Um and then also the auditor results and just like in previous years um you know the business office um the different um departments within the uh you know we not only work with the business office but we also have to work with the special ed education department, we also have to work with federal programs department and they do a good job in terms of doing what they need to do um to number one incorporate proper internal controls and when you have proper internal controls you don't have any findings related to any compliance requirements. Um so the case this year, um our major programs were title one and the special education cluster. So what's going to happen now? Um it seems like your title one's ticking up again now that this funding is off. You're probably going to be on a rotation with your federal awards um every year in terms of we'll test title one special education cluster and your then your child nutrition cluster um on an annual basis and we'll kind of rotate that on a three-year basis. Everything kind of got thrown off a little bit with ESRE and when Esser came on board they considered it high risk and we had to audit it. Um so it was a little tricky there for a while but we should get back on track in terms of um being on a normal rotation with your federal awards. Um title one fell off for a little bit um but it did tick back over the 750 the current year appropriation for the current year. Um and that is all that I currently have. Um just important I think Tom even though it is just September important that I get here um communicate with the board um you know the results of the audit and then obviously to the public as well and we have already started Tom's already spoken to the new team here about you know getting a more aggressive timeline to get this June 30th 2025 audit done um which I think will happen given you know um the person that worked with Tom to get this audit done um pretty quickly. once we transferred over here. That's all I have. >> Okay. >> Are there any questions? >> I mean, I see that $750,000 threshold between program A and B. What is the A and B? >> Uh A. Well, so when we're doing our so that number is going to change to a million dollars for your next audit. So A and B. So if you expend over $750,000 in a particular federal award, so during the current year, your title one program, your child nutrition program, your special education cluster program, and your IDEA program all spent over 750,000. They're all considered a program. So then we go through our risk assessment and then uh our major programs determination. And during the past couple years, we've audited ESER, child nutrition cluster program, and IDA. and we haven't audited title one. The rule is within the most recent two audit periods. Um, so they were considered a programs. Everything under 750 is considered a B program and we only eval program if the federal government number one tells us to or or we determine ourselves that we consider it high risk. And your title two program I mean your your uh B programs are like title two and they're really small. So it would be a really um rare instance in which we would audit a B program. >> Really just determines as Carl's saying the level of review that they do against those. Right. >> Okay. >> That's correct. Yep. >> All right. >> Any other questions, Mr. Heartline? >> No, I mean clean audit looks great. >> Good. >> Appreciate the hard work. >> Okay, then it's um >> I'm going to uh I'm going to ask Joey to to pause the recording. We'll leave Carl on and we'll leave the room uh and the two of you can speak with Carl. >> Okay. >> At that time. Okay. >> Sounds good. >> All right, Carl. Thank you very much. We'll let you >> and I'll see you guys see you guys in a couple weeks. >> All right. Thank you. >> Okay. See you. >> All right, Joe, are you good? >> Good. Looking for a heads up from the audio team. back on. Okay. All right. So, we'll resume uh the rest of our agenda with uh with discussion on the refinancing. Um so when we uh we met in June or our May meeting, May 15th, PFM Garrett Moore was here shared with us a a plan regarding the 2017 AB and D bonds uh and refinancing them similar to what we did with the 2016 bonds and push the money back in trying to reduce our overall uh debt service. um in June. Uh Bill, um Bill Benzing should be easier to remember. Uh Bill Benzing from Eert came out and presented us the resolution uh and authorization to issue the bonds that was approved by the board at our last meeting in June. Um and we had a timeline that would have taken us through August with a sale uh in the middle of August. Um not much happened uh on a on an interest rate scale during that time. Uh and that in connection with the delay in our audit sort of slowed our process down a little bit. Um where rates weren't really moving. Uh the Fed wasn't meeting the Fed wasn't adjusting the rates. And while the Fed adjustments impact us probably more personally than any other way, right, on the short-term rates, they do influence our fin our banking rates, uh but they don't have as much uh impact to a bond trans uh bond transaction. Uh but the news last Friday with the uh regarding the labor market and the revisions that are being done, that has a little bit more long-term impact. Uh and the markets dropped down a little bit because of that. Um, we initially in anticipated savings of uh 625 uhund 625,000 um to uh that we would then uh spin back into our uh debt service. uh that number is now just under $900,000 uh which is an increase of you know over 40% uh which is good and um if I was betting I think it'll be a little better than that um as as we go forward. So, uh, the new timeline, uh, has a ratings call with Moody's uh, next Tuesday, the 16th that I'll participate in, uh, and then a due diligence call either the 17th or 18th of next week, uh, to just make sure that the bank, PFM, Eert, Seammens, all are on the same page. our solicitor participates in that uh to make sure our documents are order and everything is is good to go. Uh and we'd anticipate a sale uh around October 2nd, which is sort of that last week in uh September uh into October is uh is the current timeline that we have. >> Okay. >> And then we're looking at the the next one after that sometime February, March. >> Yes. Yep. So there's a then a smaller one again, right? This isn't nearly the size of the one of the 2016, but we do we have a another another bite at the apple, I think, as you usually say, >> right? >> Uh that will get us uh you know, another little bit of savings. >> Okay. >> Okay. So So in in the end, we could potentially look at close to a million and then >> yes, >> million or more. I think I think the second one was you know hundred >> couple hundred thousand right so the boost in in this one is is fairly significant a 40% jump >> um so I think that's uh that's better better uh better lucky than good sometimes right uh and good to get that uh refinancing uh taken care of >> okay >> and then this is the last one for several years >> yes yes okay Um any questions on the audited numbers that were useful? I think when I went back to our budget for the 2425 year, right, which would have included in our year that current year number, right, we had anticipated a surplus of 2.4. So we're a little better on that surplus. um that doesn't account for a $900,000 IU bill uh that we got the following year that we're going to push into the 2425 numbers. >> Okay. >> So that then we're clear moving forward, >> right? >> Um I think I included or Dr. Luca included uh an update on that last week, right? And I think the savings is like $2.8 8 million uh you know something short of a $100,000 difference from what we had anticipated uh when we closed out the books uh and worked through that budget uh that we'll be getting this year from the IU uh as they unraveling that delay uh delay methodology. Right. >> I'm still trying to catch up here. >> I didn't didn't quite read >> between the jet lag in the numbers, right? You know, um, so all right. Any any questions with those? >> Nope. >> I'd like to give a shout out to Vera on the audit, though. She really did a spectacular job. Uh, it felt like it felt like a uh a revolving door at times, right? Vera would send it. we'd think we're moving forward and we'd take two steps and something would change and she'd be meeting with someone else and we'd take two steps backwards. Did you send this? We've already sent it but I can send it again. I've already sent it but I can send it again. Uh and then when we finally got to CLA uh and working with Heather there, I think it was really uh it took off. I think we finished it in uh we finished the work probably in in three weeks. Um, but it does it does change the cycle as I shared with my wife, right? In my world, everything has a has a season, right? There's a budget season. When that gets extended, that causes that spins us a little bit later, right? The audit should have been done. When that gets not gets done, when it doesn't get done, you know, you're you're you're cramped up again. Um, but it's it's good to be moving on. I worked with uh CLA in a prior prior lifetime and I found them to be incredibly responsive and and very bright and very um very complete. I think they have good teams that they sent out. Uh and I think that was our challenge uh with at with them. uh when BBD went to with them they I don't think they were prepared or staffed appropriately or trained appropriately to to deal with uh government entities >> or we clearly have a good person in Carl who >> yeah Carl's a sharp guy's a sharp guy and does does good work >> yeah and we've worked with him for a while so >> we have we have and it was nice to to have the new view quite honestly right as as you get into the into a routine it's it's good and when auditor when you change them. It's always a good opportunity for us to rethink what we're looking at and how we're doing things. Uh so I really appreciated Heather's insight and and really the questions that Carl already knew the answers to, but forcing us to go back through them is always a uh always a good exercise for the team. >> The new switch over to the new software and everything is >> um it's uh it's >> still going. It's good. It's good. >> Uh I think I think for the business office uh and and HR right which is uh was the first to move. I think the skyward uh uh cumulative imp implementation was really good for some areas. I think payroll it is an exceptionally better module uh than uh than Skyward SMS was. uh you know Skyward SMS as I would you know we'd share right it was literally like going back to when I got out of school in in 80s right you're looking at screens that are miniaturized because they're structurally set that way right there is no flexibility to it was brutal uh and you had to go in and out of different systems so it was great to say goodbye to that it took a little time to uh to gain our footing uh but I think that's going well I think the challenge challenge on the business side is some of their financial reporting and that has been a challenge for going on nine months uh with regards to debits and credits right something as simple as a debit and a credit and you know I like to see debits with minus signs and uh credits and minus signs and debits positive numbers right that's how it all balances uh and uh for some reason it doesn't in uh in cumulative in just in the GL reporting everything else trial balance the math works uh but the report doesn't and we have been on them uh since December uh trying to get that resolved. I think the latest spin out came out a week ago. I haven't had a chance to go back and test it. Uh but we've been sort of working around that. Other than that, it's been >> it's really just a software glitch that is in this. >> Yeah, it's it's a reporting, you know, it's sort of a oddity, right? It's a reporting issue. And you know, I remember last December, I'm printing a report and I think, you know, I think the numbers are wrong. And I run over to Ver and I come back and we look at this. I'm like, I thought you made this entry. You did. And it did. It just didn't report it right. Right. So, we looked at it. You could see the you could see the issue. Uh it was frustrating uh to get that done. Uh on the student side, uh that that uh roll out went uh fairly well. uh I think is is moving, you know, moving along a little easier uh than than we had on the business side, but there's a lot of components to the business side. Not that there isn't on the student side, but it's sort of one topic as opposed to AP and GL and all HR and payroll uh that you deal with on the other side. >> Good. >> Okay. >> All right. >> Any other questions? Uh we don't have anything for the board to approve uh at our September meeting with the exception of the audited statements and as Carl said he'll be here for that. Uh and we'll have the on theformational side we'll have the PISLAF uh regular monthly reports included which are attached to this >> uh committee agenda. Okay. >> And they were out on uh last week too for the board meeting. Yep. So >> yeah, >> not going to be a significant difference. >> Okay. >> All righty. >> Anything for the good of the order? >> Anything else to complain? >> All right. Next meeting is >> The next meeting is >> October 15th. >> October 16th. >> Is it the 16th? >> Overber 16th. >> The 16th. >> Same time, same boardroom. Motion to adjurnn. So moved. All >> righty. Thank you all for your time. >> Thank you very much. Appreciate it.