Auditor gives Katonah-Lewisboro School District ‘clean’ opinion

By JEFF MORRIS

Auditing firm PKF O’Connor Davies presented its 2026 audit findings to the Katonah-Lewisboro Board of Education at the Oct. 8 meeting.

The firm’s audit manager, Carolyn Kopf, said the district received an unmodified, or clean, opinion on its 2026 financial statements, which is the most favorable opinion available.

Kopf said this was a high-level overview, and that she had met with the audit committee the previous week and given them a much more detailed report.

General fund

The district had $127 million of general fund revenues, said Kopf, which was a budgetary surplus of $3.2 million. Expenditures were $120.8 million, which was a budgetary savings of about $3.1 million. The total budgetary surplus for the district was $6.3 million. 

Kopf noted that the actual surplus that gets added into the fund balance is $1.8 million. The difference between those two numbers, she said, is the planned use of fund balance. In the adopted budget at the beginning of 2026, the planned use of fund balance was $4.3 million; $1.1 million was use of reserves; $2.45 million was unassigned; and there were $740,000 of encumbrances.

“This was then modified during the year by $2.7 million, which was mainly the capital reserve proposition of $2.5 million,” she said, plus $200,000 of miscellaneous settlements. 

The capital reserve proposition to which she referred was approved by voters on May 19 and authorized the board to expend $2.5 million from the 2015 Renovations and Upgrades Capital Reserve for use in constructing athletic, recreational and safety and security improvements to various district facilities and sites. 

Kopf said the actual number of $1.8 million was added into the prior-year fund balance of $27.3 million, to bring the final 2026 fund balance to $29.14 million.

Use of fund balance

Kopf explained how the fund balance is allocated. She said there are four components of fund balance: non-spendable, restricted, assigned, and unassigned. There was $2.2 million in non-spendable, comprising any bills the district paid in advance. The largest component, $16.95 million, is the restricted category, which is broken out by different reserves. She listed the largest of these: $1.1 million used to balance the 2027 budget; $2.5 million for tax certiorari; $1.4 million for employee benefit accrued liability; $2.7 million of Employees’ Retirement System employee contributions; $4.7 million in Teachers’ Retirement System contributions; liability claims of $1.6 million; and debt service for $2.5 million. 

The assigned category includes $2.5 million in encumbrances that will roll into the 2027 budget. Also in the assigned category is $2.25 million, part of the amount used to balance the 2027 budget, which gets added to the $1.1 million from restrictions. 

The last category is unassigned fund balance at $5.3 million. Kopf said this is limited by New York state to 4% of the subsequent year’s budget, and the district is currently at that 4%. 

Kopf also enumerated the district’s outstanding debt. She said at the end of 2026, the district will have $24.5 million of BANs, or bond anticipation notes, outstanding, $21.41 million of bonds outstanding, and $10.3 million for energy performance contracts.

Other Post Employment Benefits

Board President Barbara Williams asked for a clarification of OPEB, or Other Post Employment Benefits, which she said was “a perennial question that comes up, and I think it has come up recently.” 

In the audit report, total OPEB liability at the end of the year is shown as $259,222,661. Williams said it was easy to look at “that very big number and to say, how is the district going to deal with this debt?” Williams was hoping for an explanation to help understand what it is, what it isn’t, what the district can and can’t do, and how it compares to other districts.

Kopf explained it is a long-term liability that’s actuarially determined, that represents the present value for all future and current retirees and their health benefits that the district pays. She said under New York state law, you cannot pre-fund that liability. 

“It’s pay as you go, so as the expenses are incurred, that is the only way that the district can pay that amount,” she said. “It’s large, but it is comparable to many other districts because it is the present value for all of the current and future retiree health benefits.”

Williams rephrased that explanation as “taking every retiree and then taking the current employee population and when they potentially retire, and then looking forward all of those many years and then calculating future potential costs of health care and then taking that entire big number.” She wanted assurance that it is not a real debt, but a projection of what the district might owe over the course of many years.

Kopf confirmed it is a long-term liability that is reassessed annually, and the district only pays the current expenses.

Williams said she wanted to contextualize it because she thought it was important for people to understand that they budget year to year, and make their calculations based on the current scenario.