Finance committee hears audit delay, interim statements show small surplus but long-term gap remains

Tony, the town finance staff member who presented the report, told the committee the audit for fiscal years 2022–23 is delayed by two technical accounting items that must be resolved before final statements can be issued. "Part of the delay is there are two GASB pronouncements that... one was our OPEB valuation. The report came back and the beginning number for '23 didn't tie to the ending number of '22," Tony said, adding the subscription-accounting pronouncement also requires staff and auditors to reclassify some arrangements.

The interim fund financial statements Tony presented show mixed results: he described a projected $1.3 million reduction in the general fund largely driven by consulting and legal costs for the housing element update, a $483,000 increase in the open-space fund, and roughly a $760,000 increase in the affordable-housing (in-lieu) fund. Tony said the town expects the auditors to receive the adjusted trial balance and return final audit reports to the finance committee at the next meeting, with a target of late February for finalization.

Why it matters: the audited statements underpin reserve calculations and budget decisions. Committee members pressed whether the town had fallen below its reserve policy. Tony confirmed that for FY22–23 the town’s then-reserve policy was 60% and that the ending general-fund balance fell below that threshold, prompting the need for longer-term planning.

Members and staff also reviewed midyear operating results for FY24–25. Tony said the town is projecting an almost $80,000 surplus for FY24–25 after revenues came in about 6.4% above budget and expenses about 5.4% above. He warned the result relied in part on one-time timing items and that ongoing structural pressures remain: salary and benefit costs, an expected roughly $300,000 increase in the sheriff's contract next year once temporary credits expire, and vacancies that continue to be covered by consultants.

Public participants and subcommittee chairs weighed in on narrower topics related to the budget presentation. Betsy Morgan Thaler, chair of the Open Space Committee, asked that staff consult the Open Space Committee before additional open-space appropriations are pursued for appraisals and legal review. Tony said one Skyline Boulevard appraisal had been completed and that he would follow up about the second appraisal and related budget treatment.

Next steps: Tony said staff will correct a numeric typo called out in the balance sheet, complete the GASB-related adjustments, and return a set of audited financial statements to the finance committee at the next meeting; the committee scheduled a follow-up audit review for late February.