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Auditor: Sachem ended year with clean audit but long-term budget risks remain
Summary
Independent auditors delivered an unmodified opinion on the district's financial statements but warned that recent one-time revenues and continued appropriation of reserves leave the district's budget vulnerable in coming years.
Brent Jensen, a partner with EFPR Group, told the Sachem Central School District Board of Education on Oct. 8 that the firm will issue clean (unmodified) opinions on the district's financial statements, its federal single audit and its extra-classroom activities reports for the fiscal year just ended. Jensen said the auditors found no reportable findings and no material weaknesses or significant deficiencies in internal controls.
The audit showed the district closed the year with $366,600,000 in general-fund revenues against $358,500,000 in expenditures and $9,100,000 in net transfers to other funds, leaving a $1,000,000 decrease in general-fund balance and a total fund balance of $55,200,000. Jensen said about $12,500,000 of that is assigned for next year, $29,800,000 is restricted and $12,700,000 is unassigned (3.33% of next year's budget). "You still have a $1,000,000 loss of fund balance," Jensen said.
Why it matters: the auditors and several board members said much of the improved outcome this year came from items unlikely to repeat, including $1,800,000 more interest income than budgeted and about $1,300,000 recorded as miscellaneous (BOCES disbursements), and from $8,300,000 in expenditures coming under budget. Jensen cautioned that interest income and one-time receipts cannot be relied on going forward and that the board has again appropriated reserves to balance next year's budget.
Board members pushed for clearer public messaging and for budget planning that does not rely on one-time items. "We should not be using reserves to fund day to day operations," said Mike, a board member, summarizing board concern about continuing to appropriate fund balance to balance recurring costs.
The board noted the audit presentation was part of the start of budget season. Michelle (district staff) reminded the board that a resolution to adopt the financial statements was on the business agenda (item b) for the meeting.
Supporting details from the audit: the district had $4,900,000 more revenue than budgeted (largely interest and BOCES disbursements) and $8,300,000 less in expenditures than budgeted, with the largest single savings in employee benefits (about $3,000,000). Jensen emphasized the restricted reserves exist to cover contingent obligations such as retirement incentive payments and potential increases to employer retirement contribution rates.
Board members and the auditor discussed structural constraints on revenue growth, including the state's 2% property tax cap and slow increases in state aid, and urged the community to review the audit report the district will publish on its website.
Looking ahead: auditors and board members said the district must identify sustainable revenue or expenditure changes because using reserves year after year is not sustainable. The board did not take new formal budget action during the presentation, but administration will include the audit results in the district's upcoming budget work.
