The Croton-on-Hudson Board of Trustees gathered Tuesday for a work session focused on the Village’s financial housekeeping, receiving the fiscal year 2025 audit. The message from the independent auditor was clear: the Village is in solid fiscal shape, even if the accounting rules make the bottom line look concerning on paper. Alan Kasay of PFK O’Connor Davies presented the audit results, noting that the Village received an "unmodified opinion," often referred to as a clean opinion. "That’s the best opinion you could receive," Kasay told the Board. {{quote:116}} However, the audit highlighted a significant disparity between the Village's cash flow and its "full accrual" financial position—a theoretical accounting method that includes long-term liabilities. On paper, the Village shows a net position deficit of nearly $43 million. The primary driver of that deficit is a roughly $39 million liability for Other Post-Employment Benefits (OPEB)—healthcare benefits for future retirees. This number is an accounting estimate required by the Government Accounting Standards Board (GASB), projecting the cost of health insurance for current employees if they were to retire tomorrow and live out their life expectancy. Kasay emphasized that this massive number is essentially informational and does not hinder the Village's actual operations. "New York state does not allow municipalities to set up an irrevocable trust [to pre-fund it]," Kasay explained. "Even if you wanted to... to fund the $39 million liability would be rather difficult... It’s strictly on the statement of net position... It does not affect your bond rating. It does not affect your operations." {{quote:388}} Mayor Brian Pugh clarified that the state effectively prohibits the Village from saving for this specific liability in advance, forcing the obligation to remain on the books as a debt while the Village pays for retirees on a "pay-as-you-go" basis. **Revenues Up, Expenses Higher** Turning to the day-to-day governmental funds, the picture was brighter. The Village’s General Fund revenues totaled nearly $23 million for the year, representing a 4% increase over the previous year and a positive budget variance of $1.1 million. However, expenditures also rose by approximately 5%, totaling $20.3 million. Kasay pointed to rising personnel costs as the main factor. "The reason is the health benefits went up about $400,000 and the retirement benefits were up as well," Kasay said. {{quote:681}} Despite the higher spending, the Village ended the year with a total fund balance of roughly $11 million—only about $400,000 less than the prior year. **Strategic Debt Management** A major topic of discussion was the Village’s strategy regarding its Capital Projects Fund. The audit noted that the Village transferred approximately $4 million from its unassigned fund balance to capital projects. This allowed the Village to pay for infrastructure improvements with cash reserves rather than borrowing money by issuing bonds. "Basically, what you’re doing is you’re taking money from your unassigned fund balance, and instead of issuing debt, you’re using it to fund some of the capital projects," Kasay said. "You’re saving the issuance cost... and if you issue a ten, fifteen, twenty year bond, you’re saving interest for that period of time. So that’s a smart thing to do." {{quote:746}} Village Manager Bryan Healy also noted that the Village maintains a reserve fund specifically for unexpected spikes in pension costs, a "rainy day fund" to buffer against market volatility. Looking ahead, the Board and auditor discussed potential future challenges, including the possibility of the Federal Reserve lowering interest rates in June. While lower rates generally hurt savers, they could present an opportunity for the Village to refinance existing bonds at a lower rate. The Board is expected to formally vote to accept the audit report at its next regular meeting.