A pattern of poor budgeting led the Brentwood school district to accumulate excessive fund balance as well as reserve funds that surpassed board-approved amounts and have gone unused, according to an audit released Tuesday.
The audit, released by New York State Comptroller Thomas P. DiNapoli, also identified several personnel actions that ignored district policy, most notably in the search for a new superintendent, auditors found.
In its response to the auditors, however, Brentwood district officials disputed many of the findings, saying that their fiscal practices were sound and appropriate steps were taken in hiring a new superintendent.
The district named Levi McIntyre, a retired administrator who had worked for years in the Longwood school district, superintendent in March 2015. The Brentwood district is one of the Island’s largest districts and one of its poorest.
In a statement Tuesday, a district spokesman said: “The District takes the recent audit by by the Office of New York State Comptroller very seriously. We are pleased that audit did not uncover any evidence of fraud. Although, we disagree strongly with the audit’s findings we will carefully review the report with the goal of strengthening the Brentwood School District’s operations.”
The audit covered from July, 1, 2014, to Oct. 31, 2015, but auditors also extended the period from July 1, 2012, to March 31, 2016, to review fund balance and budget trends.
Auditors found the school board and district officials did not comply with district policy or provide justification for why it bypassed policies when hiring the new superintendent and several administrators.
For example, the board paid the Eastern Suffolk Board of Cooperative Educational Services about $7,000 to conduct a thorough search for a qualified superintendent. Instead of hiring one of the candidates BOCES recommended as having the best qualifications, the board hired a candidate that BOCES recommended be excluded.
Brentwood officials countered in their response, however, that it is a “false assumption” to assume that the current superintendent was not qualified for the position because he was not a BOCES-recommended candidate.
“The comptroller’s audit team should not substitute its judgment for the Board . . . insisting that the Board abides by the BOCES recommendation which was advisory only,” the response noted.
The comptroller’s auditors also found school officials consistently overestimated expenditures during a three-year period, resulting in an accumulation of excess fund balance. The auditors said in their report that the district used only $5.6 million — about 9 percent — of $60.8 million in fund balance over a three-year period. They said this exceeded statutory limits.
“When unused appropriated fund balance is added back, the district’s unrestricted fund balance was between 8.2 percent and 9.2 percent of the ensuing year’s budget, more than twice the legal limit,” auditors said. They also said the district overfunded the retirement contribution reserve fund by $4.3 million.
In their response, Brentwood school officials disagreed with the comment that its fund balance exceeded limits.
“The comptroller’s office is using a recalculated figure by adding the unused, appropriated fund balance to the actual, unrestricted fund balance,” the response noted. “The district and its auditors are not aware of a method of recalculating unrestricted fund balance to include appropriated fund balance.”
As part of the audit, DiNapoli made a series of recommendations to Brentwood school officials. These include: adopt budgets with realistic expenditure estimates, use surplus funds as a financing sources for increasing necessary reserves or reducing property taxes.
The district also should discontinue the practice of adopting budgets that result in the appropriation of fund balance not needed to support district operations; update the fund balance policy to indicate the extent to which fund balance can be used, what a minimum acceptable balance is and when it is acceptable to use fund balance.
The district should properly establish all reserve funds by resolution, which should include the rationale, objective and funding level for each reserve; adhere to district policy when hiring candidates; comply with district policy when posting job openings and appointing administrators; and ensure that all employees, including retired administrators rehired on a temporary basis, complete disclosure forms and are in compliance with criminal background checks.
“This audit revealed some troubling decisions made by district officials,” DiNapoli said. “The failure to adhere to district policies and best practices, whether it be when putting together the annual budget or hiring new employees, undermines the principles of transparency and accountability. Brentwood officials should take these audit findings seriously and make necessary changes.”