Auditors give Cranston an unmodified opinion but flag deficits and control issues

CliftonLarsonAllen audit principal Stephen Gross told the Cranston City Council on March 2 that the city’s FY2025 financial statements received an unmodified (clean) opinion but that auditors identified two findings that need attention. Gross said one finding is a multi‑year carryover concerning the schedule of federal assistance and the other is a new finding tied to the distribution of OPEB trust assets for the school department.

Gross summarized the city’s financial highlights: on a government‑wide basis the net position deficit widened slightly from about $249 million to $258 million, while the city’s general fund showed a $4.9 million deficit on a budgetary (RSI‑1) basis for FY2025. The school unrestricted fund recorded a $2.9 million budgetary deficit; Gross and Cranston Public Schools officials explained that the school’s GAAP presentation and the budgetary presentation differ (the auditor cited a $3.9 million GAAP figure after combining certain capital reserve activity). Gross also noted a $50 million bond recorded in FY2025 and flagged several funds with deficit positions that will require corrective action once permanent financing and transfers occur.

Council members repeatedly pressed auditors and city staff to reconcile numbers reported in the management’s discussion and analysis with the budgetary reports the council uses in oversight. Gross explained the three reporting layers—government‑wide (GAAP), fund‑level (modified accrual) and budgetary accounting—and confirmed the $4.9 million figure as the city’s budget‑to‑actual deficit reported on RSI‑1.

Members of the council asked about implications for the city’s bond rating and options to limit future deficits. City finance staff said Fitch kept the city at a plus rating after the $50 million bond issue, though they acknowledged a single‑notch pause around the financing. The administration told councilors that it had begun implementing hiring and spending controls, including scrutinizing nonessential hires, and said fuller, formalized measures would be presented in the coming weeks. The administration and auditor both emphasized that pension and OPEB funding and reserve levels (the administration indicated a policy target above the current 5% reserve level) are central to long‑term fiscal health.

Cranston Public Schools Chief Financial Officer Joseph Belduchi told the council the district’s budget is thin and that drivers for the school’s deficit include teacher substitute costs, out‑of‑district tuition, and a pension invoice timing change that added roughly $1.2 million to FY2025 obligations. Belduchi said the district is pursuing rebate programs and collaborative purchasing to help reduce health‑plan deficits over multiple years.

The audit presentation prompted multiple follow‑up requests from the council: printed binders for committee review, a clearer reconciliation of budgetary versus GAAP figures, and more detailed departmental line‑item explanations (councilors referenced page 52 and page 124 of the audit packet when asking about overspent lines such as legal services, finance severance, and certain economic development appropriations). The administration said those line‑item explanations and proposed budgetary controls will be provided to council committees and, when appropriate, discussed in executive session for sensitive items.

The auditor closed by reiterating audit observations, including the two findings to be addressed and the need for continued attention to reserves and liability funding. Council leaders said they will ask CliftonLarsonAllen to return for committee‑level questions and to provide printed audit binders for members.