Northport Village had a 14.5 percent — or $736,965 — year-over-year increase in its reserve funds in the 2016-17 fiscal year — more than anticipated due to unexpected payouts, according to an annual audit.

The reserve surplus was largely due to $314,000 in payouts for taxes utilities owed the village and a legal settlement of $144,500 for funds that officials say a former employee stole from the village, village Treasurer Leonard Marchese said Wednesday.

“It was a decent year in terms of us recouping additional revenues from prior actions,” he said. “That’s a reflection on management working hard to follow through on outstanding claims and invoicing. When we adopted the budget, those revenues were in no way certain, so it wouldn’t have been prudent for us to budget for those.”

The village also surpassed officials’ total projections for the fiscal year that ended Feb. 28, 2017, with actual revenue of nearly $19.5 million, compared to the $16.2 million officials had anticipated, according to the audit released in August and the 2016-17 budget.

Officials said that was largely due to nearly $3 million in short-term bonds for upgrades to Northport’s wastewater treatment plant. That money accounted for the significantly higher than expected revenue for the year, Tobin said.

Deputy Mayor Henry Tobin said officials could not budget for money that the village was not guaranteed to receive within the fiscal year.

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The village had budgeted for nearly $16.2 million in expenses, with actual expenditures coming in at just over $16 million.

Tobin said that officials are considering the best ways to spend the reserve fund surplus. The goal is to use it to save taxpayer money, he said, adding that there are different ways to do that. In the past, surpluses have been used to pay off and refinance bonds to save the village money on interest.

“The money is most effectively used to lower future expenses,” he said.

Having a strong reserve fund also can help small governments with unexpected costs, Tobin said. For example, the village was able to cover nearly $1 million in unexpected costs due to superstorm Sandy. Northport was later reimbursed for its costs, but didn’t have to delay critical recovery work, Tobin said.