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Audit: Elmont school district’s reserves were above legal limit

Elmont school district offices on Thursday, July 27,

Elmont school district offices on Thursday, July 27, 2017, in Elmont. Credit: Howard Schnapp

A state audit of the Elmont school district found that the system overestimated expenditures by $19 million over a three-year period and exceeded the legal limit for its unrestricted fund balance, or rainy day fund.

“The board and district officials did not ensure that budget estimates and fund balance were reasonable,” auditors in state Comptroller Thomas DiNapoli’s office wrote in a report released Tuesday. “Unrealistic budget estimates can mislead district residents and can have a significant impact on the district’s year-end surplus fund balance and financial condition.”

The audit reviewed district budgets from July 1, 2013, through Dec. 31, 2016. The comptroller’s office found that the district had consistently overestimated expenditures, leading to surpluses that pushed the unrestricted fund balance over the statutory limit — ranging between 10.4 percent and 11.3 percent of the next school year’s operating budget for the three years examined.

Under state law, districts cannot amass an unrestricted fund balance that exceeds 4 percent of the ensuing year’s operating budget. The comptroller’s office has consistently criticized districts that have exceeded that statutory limit, with Elmont becoming the 25th school system on Long Island since 2014 to be cited for maintaining excessive reserve funds.

District officials said most of the overestimated spending was for the special education program, including teachers’ salaries. Their written response, which was included in the audit report, also took issue with the auditors’ characterization of its use of the unrestricted fund and other money.

Elmont board president Michael A. Jaime and Superintendent Al Harper, in the letter to DiNapoli’s office, said special education services, building operations and maintenance “are subject to large increases in costs during the school year.”

Their letter added, “thus, our conservative budgeting, including budgeting funds for ‘worst case scenarios,’ we regard as prudent fiscal management.” It noted that similar audit recommendations urging districts “to be more aggressive in budgeting . . . is within the local school boards’ discretion and judgment.”

Harper, in a statement to Newsday, noted that several school board members are employed in the financial sector and “are deeply involved in every aspect of developing and monitoring the district’s budgets, finances and financial condition, and meet several times yearly with the district’s auditors regarding the district’s financial status.”

Elmont’s voter-approved budget of $86.4 million for 2017-18 raised property-tax collections 0.67 percent, compared with an Islandwide average of 1.73 percent. The district has about 4,000 students and 800 employees.

In another report released Tuesday, DiNapoli’s office faulted the North Shore Central School District for its handling of fuel inventory. Auditors reviewed district practices from July 1, 2015, through the end of 2016.

School officials “did not maintain a book inventory and reconcile it to the physical inventory for each type of fuel,” the report said. This meant that “district officials have no assurance that fuel purchased is properly accounted for and used only for district purposes. In addition, there is an increased risk that fuel leaks or losses could remain undetected, which could prove costly over a period of time,” the auditors wrote.

Former Superintendent Edward Melnick, who retired at the end of this past school year, said in a response letter to the comptroller’s office that the district has adopted corrective measures to be instituted in the 2018-19 budget, including a process for managing fuel inventory levels in real time.

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