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Audit: Plainedge school district illegally amassed millions

Auditors found that Plainedge spent an average $1.2

Auditors found that Plainedge spent an average $1.2 million annually on costs such as contributions to workers' pensions. Credit: Danielle Finkelstein

The Plainedge school district recently emerged as the 28th on Long Island to be rapped by state auditors for amassing millions of dollars in cash reserves beyond legal limits.

A new audit from the state Comptroller’s Office found that Plainedge officials overestimated expenses, including costs of employee benefits and special education, by more than $15 million over three consecutive years.

The audit review covered a period running from 2013-14 through 2015-16, and its finding touched off an often-testy exchange with local school officials who defended their financial stewardship.

In effect, Plainedge’s repeated miscalculations allowed the district to pile up unrestricted reserves far beyond those allowed by state law in two of the three years covered, auditors said.

Those cached funds totaled $7.7 million, or 8.7 percent of Plainedge’s budget in 2013-14, and $7.2 million, or 7.9 percent of the budget, two years later.

Under law, unrestricted reserves, known as “rainy day funds,” are restricted to 4 percent of a district’s budget.

The 16-page audit report, prepared under the direction of Ira McCracken, chief examiner for the comptroller’s regional office in Hauppauge, warned that Plainedge’s school board and administration needed to take greater care in meeting their responsibilities to local taxpayers.

“Budgeting practices that continually overestimate expenditures may result in the accumulation and retention of excessive funds, resulting in tax levies that are higher than necessary,” stated the report, posted Jan. 12.

Local officials, while complimenting auditors on their professionalism, took sharp exception to the suggestion they mishandled district’s finances.

Plainedge’s board president, Catherine Flanagan, and its superintendent, Edward Salina, said in a 20-page response letter that their budgeting focused on maintaining the district’s long-range fiscal stability as well as the quality of its academic programs. Any impression to the contrary was a “gross mischaracterization,” they added.

“Our district is committed to the long-term practice of solid and sound fiscal responsibility in the management of the district’s finances and accountability to our community,” the letter stated.

Flanagan and Salina also noted that the district’s $91.5 million budget for the 2017-18 school year carried a zero increase in taxes. The district’s budgeted tax hike of 1.39 percent for 2016-17 was also below the Long Island average, but the 1.95 percent increase in 2015-16 was higher than average.

Most districts, in addition to their unrestricted reserves, also maintain accounts earmarked for specific purposes. Staffers from the comptroller’s office reported that Plainedge maintained five such reserves, four of which were overfunded.

The largest of these was a $7.7 million fund, set aside for contributions to workers’ pension costs. Auditors found that Plainedge spent an average $1.2 million annually on such costs — meaning that the reserve balance was more than six times the average annual cost.

The comptroller’s office since January 2014 has flagged 28 districts in Nassau and Suffolk counties, and many more statewide, for maintaining excessive reserves.

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