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Audit: Massapequa school district overestimated expenses

People flocked to a Massapequa school board meeting

People flocked to a Massapequa school board meeting on Aug. 3, 2017, when the agenda focused on the plan to move sixth-graders districtwide into Alfred G. Berner Middle School with the seventh- and eighth-graders. Credit: Danielle Finkelstein

The Massapequa school district overestimated expenses by nearly $25 million over three years and amassed unneeded reserve funds, according to a new state audit report that is the 26th in recent years to rap individual Long Island systems for similar improprieties.

Massapequa school officials challenged the state’s conclusions, writing in a response letter that they took pride in providing the district’s 7,100 students with enhanced educational programs while also keeping tax increases low.

On the other side, local residents opposed to the district’s action this semester in moving sixth-graders to Alfred G. Berner Middle School cited the audit as support of their contention that local education authorities act in a high-handed manner.

The controversies appear headed for debate on Thursday night, when the audit is to be formally presented to the district’s five-member school board.

The audit report, released this week by the state comptroller’s office, covers Massapequa’s budgeting practices from the 2013-14 through the 2015-16 school years. Auditors found that the district overestimated costs of teacher salaries, busing contracts and other expense items during that period by $24.9 million, or 4.6 percent of total appropriations.

“As a result, the Board levied more taxes than necessary to fund the district’s operations,” stated the audit team, which works out of the comptroller’s regional office in Hauppauge under the supervision of Chief Examiner Ira McCracken.

State analysts also concluded that three of the six reserve accounts maintained by the district might be overfunded.

One example provided was a reserve earmarked for workers’ unemployment benefits.

Auditors reported that the fund totaled $4.8 million as of June 30, 2016, and that the district withdrew no money from that fund to pay unemployment costs during the three years examined. Instead, district officials used general operating dollars to pay such costs, which averaged $134,257 per year.

That track record indicated, auditors said, that “the $4.8 million reserve is enough to pay for more than 36 years of unemployment costs, based on the average costs for the last three years.”

Massapequa’s superintendent, Lucille Iconis, and the board president, Timothy Taylor, challenged the state’s calculations of overestimated expenditures, calling the figures “incomplete and misleading.” In fact, they said, the district spent an average 97.7 percent of budgeted costs over the three years examined — an argument rejected by the state.

Iconis and Taylor, in their response letter to auditors, also said that sizable financial reserves were important to the district in obtaining a superior AA1 credit rating from Moody’s Investor Services.

“This outstanding credit rating saves the taxpayers interest costs whenever the District borrows or refinances a bond issue,” Iconis and Taylor wrote.

The audit report appears likely to fuel an ongoing local dispute over the transfer of sixth-graders to the Berner School.

Parents and others who opposed the move gained a school board majority in the May 2017 elections and tried to reverse the shift in July. Then another group of parents who supported the change petitioned state Education Commissioner MaryEllen Elia, who in August barred the district from canceling the relocation until she issues a final decision.

A related lawsuit is pending in State Supreme Court.

One opposition leader, Joanne Maglione of Massapequa Park, contended Tuesday that the audit report, like the transfer of sixth-graders, was evidence that district officials “seem to move forward with plans irrespective of what the community wants.” Maglione vowed that she and others would appear at Thursday’s board meeting to continue their protest.

Maglione, an attorney and the mother of two students, acknowledged that districts need some reserves as a hedge against economic downturns and other crises, but added that Massapequa officials had gone too far in accumulating extra cash.

“There are people in the district struggling to recover from Sandy, rebuilding their houses, who could have used that money,” she said.

But Jane Ryan, a former board member and certified public accountant, said that Massapequa’s reserves had helped protect the district against fluctuations in state financial aid. For example, the 2008 stock market crash was followed by two years in which New York State reduced financial aid to districts in order to balance its own budget.

“We don’t know how much [state] aid we’re going to get from year to year,” said Ryan, who served nine years on the board before stepping down in June.

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