Pequannock audit: general fund falls $1.7M; board told to absorb big health-insurance and salary increases

Auditors from Sabaccia LLP told the Pequannock Township School District Board of Education that the district's general fund balance decreased by $1,700,000 between June 30, 2024 and June 30, 2025, falling from $17,500,000 to $15,770,000.

"We ended 06/30/2025 with $15,770,000. So that's $1,700,000 decrease," the audit lead said while reviewing the draft financial statements and the elements that drove the change, including withdrawals from capital and maintenance reserves.

The auditors detailed components of the change: a capital-reserve withdrawal (about $1,180,000), a maintenance-reserve decrease (about $67,000), a $591,000 decline in current-year excess surplus and a $326,000 decline in prior-year excess surplus. They also noted increases in extraordinary aid and small increases in unassigned fund balances that partially offset the decline. The auditors said the draft will be issued without the federal compliance supplement pending release by the U.S. Department of Education and that they expect to meet the state's December 5 filing timeframe.

On district operations, business staff and board members were told the food-service fund showed a small net decrease ($16,000) and an unrestricted net position of roughly $37,000; the district currently contributes about $75,000 from the general fund to support food service.

The board was also briefed on midyear budget changes as staff prepare the 2026–27 budget. Business staff reported an $883,000 increase tied to a 32% rise in health-insurance premiums and a $538,000 increase driven by salary movement above the previously estimated 3% guide. Officials said those adjustments and other necessary changes will be reflected in the budget that comes back to the board for approval on Dec. 15.

Despite the fund-balance decline and midyear cost pressures, auditors reported no formal recommendations in the draft audit. "We have no recommendations in the audit this year," an auditor told the board, thanking district staff for cooperation during the review.

Votes at a glance: the board approved multiple consent items earlier in the meeting by roll call, including PMC87-26 through PMC89-26, CIS48-26 through CIS50-26, and FFA69-26 through FFA71-26. Each motion was moved and seconded and carried by roll call as recorded in the meeting minutes.

What happens next: auditors will issue the financial statements with state compliance supplements and then append a smaller federal compliance supplement once released; board staff said they will incorporate the insurance and salary adjustments into the midyear budget and present updates at the next meetings.