The teachers union has declared an impasse in contract talks with the Northport-East Northport School Board, and the two sides are headed to mediation.
The parties are discussing which mediator to use, and the timing for talks will be contingent on the mediator's schedule.
An Oct. 15 report from the state comptroller found the district overestimated spending by $39.9 million during a five-year period, and revenue exceeded spending by nearly $13 million.
The report upset community members, and members of the United Teachers of Northport said it spurred them to make bigger demands for the 2014-15 contract.
"It's very difficult to say that we're willing to accept something similar to the last deal when it's discovered that this money is there and has been there, budgeted," said union president Antoinette Blanck in an interview Monday.
Teachers have not disclosed what they are seeking. Under the contract that expired in June, salaries ranged from $49,559 to $126,610.
Blanck said leaders of the 6,200-student district were not transparent about overbudgeting and underspending, and voters were not told how their tax money was used in recent years.
District officials said the budget is a public document.
John Gross, an attorney for the district, said the union was providing an inaccurate picture of the financial situation.
"Settlements [of teacher contracts] on Long Island have been very low whether or not the comptroller thinks there's a surplus," said Gross, a partner with Hauppauge-based Ingerman Smith LLP. He said the state-imposed tax cap of about 2 percent "has led to smaller teacher increases."
District officials said they expanded the restricted reserves, including the pension fund, from the equivalent of 3.5 percent of the budget in 2008-09 to 11.6 percent in 2012-13. That dropped to 7.3 percent in 2014-15, which school officials said is below the average for Long Island.
Northport schools are in a legal fight with the local LIPA plant, where officials allege the district overassessed its taxes by 90 percent. A LIPA win would financially devastate the district, another concern for school officials.
In addition to the tax cap issue, the distric superintendent is in her last year, so negotiations will likely be taken over by a new leader if they are unresolved this school year.
Unlike with most state teachers' contracts, the Northport-East Northport school district has a contract provision that allows teacher step raises to stop when contract negotiations drag on.
CORRECTION: An earlier version of this story misstated the dollar amount concerning the district's overestimated spending during a five-year period.