The Babylon and Huntington school districts overestimated expenditures in repeated budget cycles, leading to surpluses that could have held down tax levies, according to a state audit.
The Huntington Union Free School District, which operates eight schools with 4,650 students, spent an average of $4.7 million less than budgeted each year, according to the audit, released Friday by the state Comptroller’s Office.
Spending was overestimated by $6.2 million for 2012-2013; $2.9 million in 2013-2014; and $4.9 million in 2014-2015.
The Babylon Union Free School District, with three schools and about 2,000 students, spent an average of $2.5 million less than budgeted between 2011 and 2015.
The excess money ends up in the school districts’ unrestricted reserve— generally known as a rainy-day fund.
The state requires a school district’s reserve fund balance not exceed 4 percent of the next year’s actual spending. Any excess above 4 percent is supposed to go toward lower property taxes, increased reserve funds, pay for one-time expenses or lower debt.
The districts technically complied with the mandated fund balance limit, according to the audit, but both didn’t use the surpluses over the 4 percent for the stated expenses.
The Huntington school district reported a $4.6 million fund balance for 2012-2013, which complies with the 4-percent limit. The district’s budgeting resulted in a $6.7 million balance, or 5.9 percent of the following year’s budget. The following two years, the balance also exceeded the 4 percent cap.
The Babylon school district’s rainy day fund exceeded the cap for four successes years. The fund was nearly double the 4 percent cap each year. The audit also reviewed the district’s 2015-2016 budget and found it will likely exceed the cap.
“Had district officials used more realistic budget estimates, they could have avoided the accumulation of excess fund balances and possibly reduced the tax levy,” the audit said of the Babylon district.
The Huntington district spent none of their reserve funds, according to the audit. Babylon used just $602,000, or 6 percent, of nearly $10 million available over four years.
A spokesman for the comptroller’s office said overestimating future spending is common among school districts but not recommended.
The audit advised both districts to stop proposing future budgets with overestimated expenditures. The Babylon district should use its unrestricted funds for one-time expenses or to reduced property taxes.
Both districts blamed unpredictable fiscal conditions for the over-budgeting. Huntington officials said in a statement they overestimated expensesin part because they anticipated the reopening of an intermediate school and the transition from a half-day kindergarten program to a full-day program.
They also cited the construction of new housing with the potential to add “several hundred school-age students.”
“We appreciate the feedback from the state comptroller’s examiners and, as outlined in the report, also appreciate their understanding of the unique circumstances faced by the district leading to unanticipated fiscal results during the years reviewed,” said Superintendent James Polanski.
Employee benefits, teacher salaries and plant operations accounted for most of Babylon’s inflated expense, the audit reported. Benefits were overestimated by $5.1 million, or 12 percent, teacher salaries by $1.5 million, or 3 percent, and plant operation costs by $1.5 million, or 15 percent over four years.
“Responsible budgeting requires that we be prepared to meet the unexpected and/or unanticipated needs without compromising the instructional needs of our students,” Babylon district officials said in a statement, adding that at the time of the audit, the district was negotiating collective bargaining agreements, which could have required “increased expenditures.”