Audits: 6 LI school districts built surpluses, burdened taxpayers

New York State Comptroller Thomas DiNapoli's office has

New York State Comptroller Thomas DiNapoli's office has released reports on 11 school districts on Long Island, detailing strengths and weaknesses that auditors found in financial operations within each school system. DiNapoli is shown during the New York Association of Towns Annual Meeting at the Hilton on Feb. 17, 2014. (Credit: Charles Eckert)

Recent state audits have found that six Long Island school districts built up millions of dollars in cash surpluses over multiple years -- a pattern that state examiners said has placed unnecessary burdens on taxpayers.

One of those districts, New Hyde Park-Garden City Park, consistently overestimated expenses from 2008 through 2013, leading to $6.3 million in operating surpluses, state auditors reported.

In another district, North Bellmore, total revenue exceeded expenses by more than $4.7 million from 2009 through 2013, examiners reported. The auditors acknowledged a statement by North Bellmore officials, however, that the district this year revamped its fiscal practices to cut down on cash accumulations.


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The other districts are Floral Park-Bellerose, Oysterponds, Central Islip and Mattituck-Cutchogue.

In releasing the audits, the state comptroller's office has repeatedly advised school districts to apply unspent money toward holding down tax rates rather than building up excessive reserves.

"It's raising taxes in excess of what's absolutely necessary," said Jack Dougherty, audit director for the comptroller's office.

Many local school managers don't see things that way. Officials in New Hyde Park-Garden City Park contended, for example, that annual fluctuations in expenses such as health insurance rates often forced them to make financial estimates during the budgeting process that later required revision. "The problem is when the budget is being developed, there are a lot of unknowns," stated a district response letter to the comptroller's office. It was signed by Robert Katulak and Michael Frank, the superintendent and assistant superintendent for business, respectively, in New Hyde Park-Garden City Park.

Cash reserves that school districts carry over from year to year have emerged as a growing source of debate, both on Long Island and statewide. At local budget forums in April and June, many district administrators stressed their efforts to take money out of reserves and use it to meet future expenses.

Recent state audits paint a different picture, however.

Since January, Comptroller Thomas DiNapoli's office has released reports on 11 districts in Nassau and Suffolk counties, detailing strengths and weaknesses that auditors found in financial operations within each school system. Six reports zeroed in specifically on what state examiners found to be excessive cash accumulations.

Dougherty, the audit director, described such situations in an interview as "fairly common."

The most recent audits, covering North Bellmore and New Hyde Park-Garden City Park, came out Wednesday.

State and local officials agreed, on the other hand, that the issue of school reserve funds is complex. Under law, districts may set aside money only for "rainy day" emergencies in amounts equivalent to 4 percent of their budgets, or for such specified expenses as building repairs.

The comptroller's office has recommended since last year that school districts be legally permitted to set aside more money to meet future costs of retired employees' health care, a growing financial obligation. State lawmakers have taken no action on the recommendation.

Some local officials, for their part, have agreed on the need to exercise careful controls over cash surpluses. Marie Testa, who took over North Bellmore schools as superintendent in 2013, made this clear in a response letter to the comptroller's audit of her district.

"Thank you for your efforts to ensure sound fiscal practices," said the letter, cosigned by Nina Lanci, the district's board president. The letter added that North Bellmore would strive in the future to budget "only those expenditures that are necessary and appropriate."

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