=== HEADLINE === Village audit reveals $39 million liability that can't legally be paid down === SUMMARY === Croton's 2025 audit came back clean, but auditors highlighted a $39 million retiree health benefit liability the village is legally prohibited from prepaying. Trustees also discussed potential bond refinancing and used fund balance to cover capital projects instead of borrowing. === EXECUTIVE BRIEF === • Board received and reviewed the FY2025 village audit, which earned an unmodified (clean) opinion • No public comment period was held on the audit • Justice Court audit to be formally accepted at next week's board meeting • Village Manager to address control deficiencies noted in management letter, including outstanding checks, deposit accounts, and segregation of duties • Board to explore software upgrades for tracking capital projects in progress • Trustees to discuss potential state advocacy regarding OPEB funding restrictions === ARTICLE === Croton has a $39 million bill it's not allowed to pay. That number—the village's liability for retiree health benefits known as OPEB—dominated the January 28 board work session as auditor Alan Kasay of PFK O'Connor Davies walked trustees through the FY2025 financial audit. The actual annual cost to the village is about $1.3 million. But the liability keeps growing, and state law prohibits the village from doing anything about it. "The only way you could sort of pay or establish a reserve for this is to set up an irrevocable trust," Kasay explained. "New York state does not allow municipalities to do that." The result? The village is essentially penalized with roughly $1.7 million in annual imputed interest charges for money it can't legally set aside. Mayor Brian Pugh indicated the village may explore legislative advocacy on the issue. Ironically, nobody from the public showed up to comment on any of this. The audit itself earned an unmodified opinion—what Pugh called "a clean audit, the kind we wanna get." The village's general fund ended the year at $11 million, with unassigned fund balance sitting at about 25 percent of the adopted budget, which Kasay called healthy. Revenue came in about $1.1 million above final budget, driven partly by parking permits rebounding to nearly $3 million and over $400,000 from the solar facility at the train station parking lot. Expenditures rose about 5 percent, largely due to health and retirement benefit costs. Rather than borrow, the village used $1.3 million from fund balance to pay for capital projects directly—a move Kasay endorsed. "You're saving the issuance costs," he said. "And if you issue a ten, fifteen, twenty year bond, you're saving interest for that period of time." Kasay flagged two older bonds totaling about $5 million at 5 percent interest as potential candidates for refinancing if federal rates drop, though Village Manager Brian Vann noted the village's financial adviser recently determined none are currently eligible. The management letter flagged only minor control deficiencies—outstanding checks, unreconciled deposit accounts, and segregation of duties issues that Vann attributed to staffing constraints. "We're not a large enough organization that says, alright, you can enter the employees, but only you can press print on the payroll checks," Vann said. Some outstanding checks dated back nearly 20 years; most belonged to retirees who have since passed away, and those funds will be sent to the state's unclaimed funds office. **What to watch for:** The Justice Court audit comes before the board for a formal vote at the next regular meeting. Check Friday's agenda packet for details. Pension rate estimates from the state comptroller typically arrive in May or June, with bills due by December to capture an early payment discount.