Auditor warns Siren School District faces "going concern" after operating losses, $2 million loan

An independent auditor told the Siren School District committee Monday that the district’s financial statements include a disclosure raising “substantial doubt” about the district’s ability to continue as a going concern.

Brandon Williger of Two Rivers Accounting presented the annual audit and said the audit opinion itself was unmodified — meaning the statements adhere to generally accepted accounting principles — but that the auditor’s notes disclose serious financial strains. "As of June 30th, the district has experienced significant financial challenges including recurring operating deficits, declining enrollment and reductions in state funding. These conditions raise substantial doubt about the district's ability to continue as a going concern," Williger said.

Why it matters: A going‑concern disclosure signals that, while the statements were prepared under GAAP, auditors found circumstances that could put the district’s near‑term financial stability at risk. For Siren, the immediate drivers cited were a negative unassigned fund balance (reported at negative $278,357 as of June 30, 2025), heavy short‑term borrowing and a $2 million operational note the district issued this fall to cover operating needs.

Williger told the board the $2 million loan and an increasingly negative general‑fund cash position were the key changes since the prior year. "When you go from a $70,000 decrease to a $770,000 loss, and then another $400,000 loss, that's how you get here," he said, explaining why the auditor added the going‑concern disclosure this year after no such disclosure last year.

Audit findings and recurring deficiencies: The auditor reviewed a range of findings in the Schedule of Findings and questioned costs, including repeated deficiencies in reconciliation procedures, material audit adjustments caused by unreversed or mistimed journal entries, and a lack of segregation of duties where staff who prepare or write checks also perform reconciliations. Williger said several deficiencies have recurred in prior audits and urged a multi‑year remediation plan; some items are expected to be resolved by June 30, 2026, while others may require longer‑term structural fixes.

Federal and state aid context: Williger reviewed federal awards (including the child nutrition cluster, Title I and impact aid) and state aids totaling roughly $2.1 million. He noted that some federal programs were tested under single‑audit rules and that the district appeared in compliance for sampled programs. He also cautioned that impact aid timing and amounts can be unpredictable and therefore difficult to budget as a steady revenue source.

Board response and next steps: Board members asked how the situation deteriorated between audit years and whether administration had alerted the board earlier; administration said it had discussed operational loans and a potential referendum as part of financial planning. School officials emphasized they are working with the auditor and pursuing options such as budget reductions, timing fixes and a referendum process. One administrator said the district has been "fully transparent" with auditors and the board about recent steps taken.

What comes next: Williger offered to return for follow‑up meetings and to assist with remediation planning, and he said auditors will review progress on reconciliations and other corrective actions. The board must decide whether to pursue a referendum, adopt more aggressive operating cuts, restructure some services, or pursue other financing options. The committee discussion concluded with Williger’s offer to provide additional support as the district implements corrective steps.

The board later moved into closed session to consider personnel matters related to retirements and resignations.