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Audit finds clean opinion but warns Sachem faces structural budget gap
Summary
EFPR Group told the Sachem board it expects to issue clean audit opinions but flagged a large actuarial liability and significant use of reserves that produce a near-term budget gap; board members urged substantive expenditure reductions and further budget scrutiny.
Brent Jensen, partner at EFPR Group, told the Sachem Central School District Board of Education during its meeting that the firm expects to issue unmodified (clean) opinions on the district's basic financial statements, federal grant compliance (single audit) and activity funds, noting no instances of noncompliance found in the audit work.
Jensen said the district's district-wide statement shows a $712,000,000 deficit balance driven largely by an other post-employment benefit (OPEB) liability of about $823,000,000 that GASB requires districts to report; he said that item is an actuarial, long-term liability and does not by itself signal immediate fiscal distress. "That is not something that should be a significant concern because there is a single item'other post employment benefit liability'that exceeds that entire deficit balance," Jensen said.
He directed the board's attention to the general fund, which he called the management focus. Jensen reported an approximate $9 million decrease in total assets year over year and said the district used about $7.8 million of its general fund balance to operate in 2023-24. Unassigned fund balance declined by roughly $1.6 million to about $12.9 million, representing about 3.45% of the next year's budget, he said.
Jensen noted the district has appropriated roughly $9.292 million from current fund balance for 2024-25 and additionally plans to use about $3.4 million from reserves, for a total planned use of approximately $12.6 million of fund balance in the coming year. "That's a little bit scary," he said, adding that continuing to budget based on use of reserves is not sustainable without either revenue increases or expenditure reductions.
Board members responded with urgency. Board member Reynolds said the numbers were not a surprise but argued the situation makes clear the board must consider major spending changes: "We've got a lot of work to do ... I think we can start looking at expense cuts," he said. Another board member said the district is facing a potential multi‑million-dollar gap driven by contractual increases, ERS/TRS cost growth and limited room under the tax cap.
District and board members discussed state aid uncertainty. Jensen said districts vary widely in aid outcomes and cautioned against expecting large, near-term increases from Albany. The board agreed to intensify budget-committee work and encourage the budget advisory committee to analyze the numbers line by line.
The board noted the audit committee will continue internal-audit follow-ups and that the district intends to use committee processes and community engagement to explore alternatives, including potential legislative outreach about unfunded mandates.
The board later moved, seconded and approved a set of consent items that included acceptance of monthly financial statements (motion details and vote tallies were not provided in the transcript).
