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State comptroller hits Mt. Sinai schools over size of reserve fund

A budget referendum message appears on an electric

A budget referendum message appears on an electric board at the entrance to the Mount Sinai School District campus in Mount Sinai on May 14. Credit: Joseph D. Sullivan

Mount Sinai has joined the growing ranks of school districts on Long Island and statewide cited by state auditors for amassing millions of dollars in cash reserves beyond regulated limits.

The state comptroller’s office reported, in an audit posted this past week, that Mount Sinai repeatedly overestimated expenditures and underestimated tax revenues over three years, allowing the district to build overall reserves by 35 percent to a total of $16.6 million as of June, 2017.

Mount Sinai’s unrestricted reserves — sometimes known as “rainy day” funds — grew to a total of $11.5 million, which is equivalent to 19.8 percent of the system’s entire budget, state auditors reported. The overall reserve figure also includes money earmarked for specific purposes such as capital projects.

Under law, unrestricted funds are supposed to total no more than 4 percent of district budgets.

Mount Sinai officials said they intend to comply with the law. They noted, however that some of the district’s surplus reserves will be used to strengthen local security in the wake of the Feb. 14 school shootings in Parkland, Florida.

“This year we were fortunate to have funds available to increase our security needs after the incident in Parkland, Florida,” the district stated in a letter addressed to the comptroller’s regional headquarters in Hauppauge.

The letter was signed by Gordon Brosdal, superintendent of Mount Sinai schools, and Lynn Capobianco, the school board president.

The district’s $60.2 million budget for the 2018-19 school year includes money for four armed guards and other safety measures. Mount Sinai is among the first districts on the Island to include such guards in its security force.

Mount Sinai, which is located in northern Brookhaven Town, operates during the current school year on a $59.3 million budget and enrolls 2,328 students, according to the state.

The comptroller’s office, which serves as the state’s fiscal watchdog, said that Mount Sinai’s accumulation of cash is no isolated incident. Mount Sinai is the 29th district in the Nassau-Suffolk region flagged for such practices since January 2014.

“We continue to find a pattern, not only on Long Island, but also around the state, where districts tend to overestimate expenditures,” said Brian Butry, a spokesman for Comptroller Thomas DiNapoli. “This leads to a situation where you have accumulating excessive fund balances. While districts may not see this as a problem, there is a statutory limit.”

Butry said that districts could apply these unused funds to useful purposes — for example, reducing homeowners’ property taxes or, as Mount Sinai has done, hiring additional security guards.

Mount Sinai school officials informed the state that they were also restructuring their reserves, and would reduce the unrestricted portion of those funds to the state’s 4 percent limit within the next two years.

At the same time, those officials contended that expenditures were sometimes difficult to estimate in advance, because they were subject to unforeseen circumstances.

Mount Sinai officials said they budgeted “conservatively,” especially in such areas as special education, building operations and maintenance that, they asserted, were “subject to large increases in costs during the school year.”

State auditors found, however, that Mount Sinai’s estimates of future appropriations were often “overly conservative.” Auditors said the district’s actual expenses were relatively stable over three years, but that the system repeatedly overestimated those costs, nonetheless.

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