The East Meadow school district overestimated expenses by nearly $30 million, building up its cash reserves and levying more taxes than necessary, according to an audit by the state comptroller’s office.
District officials, who have a corrective action plan, said the state-imposed property tax cap, uncertain state aid and unpredictable retirement-system assessments have brought financial challenges that could threaten student programs and the so-called “rainy day” fund.
“If you can’t tax for it and you’re not getting more state aid for it, then where are you going to get the money?” East Meadow Superintendent Leon Campo said Monday. “There’s only one place to go — the gingerbread jar — and that’s our reserves.”
Auditors contend the district exceeded the legal limit of 4 percent of a year’s appropriation in its unrestricted reserve fund.
East Meadow, with a 2015-16 budget of $195.8 million, has about 7,200 students in nine schools.
The report, released Thursday, included three fiscal cycles, beginning with the 2012-13 budget, and found the district used only 22 percent of its appropriated fund balance and overestimated expenditures by a total of about $29.4 million.
The workers’ compensation reserve fund and the unemployment insurance reserve fund are overfunded, according to the report.
“Funding reserves at greater than reasonable levels essentially results in real property tax levies that are higher than necessary,” the report said.
The findings come at a time when school districts and taxpayers are beginning to set funding priorities for the coming school year. Since January 2014, the comptroller’s office has issued reports detailing what it has described as excess budgeting in about a dozen Long Island school districts. Rocky Point and East Islip were among those cited most recently.
DiNapoli’s office made several recommendations to East Meadow officials: revise the fund balance policy to comply with statutory requirements; use the surplus unrestricted fund balance to benefit district residents by establishing or increasing necessary reserves, financing one-time expenditures or reducing property taxes; and discontinue the practice of adopting budgets that result in the unrestricted fund balance not being used for operating expenses.
Campo said he believes districts need more flexibility to plan for unforeseen expenses or funding cuts in order to protect student programs. East Meadow is one of three Long Island school districts expected to receive less state aid next year than the current year, he said, and it historically imposes a flat or slight levy on taxpayers.
“This is a constructive report overall,” Campo said.