Rocky Point school district kept too much in reserve funds, says state comptroller

The Rocky Point school district has kept "excessive" amounts in its reserve funds, so taxpayers have paid more than necessary to sustain operations, according to a state comptroller's audit that looked back over five years of the system's budgets.

District officials defended their budgeting process, rebutting the comptroller's contention that the district's unrestricted "fund balance," generally known as a rainy-day fund, exceeded the statutory limit of 4 percent of a year's appropriation.

Comptroller Thomas DiNapoli's office said it examined the district's financial records from July 1, 2013, through March 31, 2015, and reviewed budgets from 2009-10 through 2013-14. Auditors found the school board had adopted budgets during that period that carried over unused, unrestricted funds and also increased amounts in several reserve funds.

As the fund balance built to $13.1 million over that time, the district "actually experienced operating surpluses and used only $1.2 million of appropriated fund balance to finance operations," the audit report said, thus exceeding the 4 percent limit "ranging from 7.8 percent (2010-2011) to 5.4 percent (2013-2014) of the ensuing year's budget."

Rocky Point experienced the surpluses because it overestimated expenditures, the report said. Among the largest variances cited between budgeted and actual expenditures was in teacher salaries, which were overestimated by $2.3 million in 2009-10.

The comptroller recommended that the district develop a plan for the use of what it called the "excess fund balance," such as by reducing property taxes, increasing other necessary reserves or paying off debt.

Rocky Point Superintendent Michael Ring, in a letter appended to the comptroller's report, flatly stated the district's fund balances "have not exceeded the statutory level of 4 percent of budgeted expenditures . . . as evidenced by the district's annual audited financial statements."

Ring wrote that the district's $6.6 million cumulative surplus during the five years the comptroller's audit examined amounted to 1.9 percent of cumulative budgeted expenditures totaling $348.9 million. He added that most of the district's surplus was generated during the 2009-10 fiscal year. Since then, he said the district's cumulative surplus of $630,337 amounted to 0.2 percent of budgeted expenditures "for the entire four-year period, which we believe represents fiscally prudent and conservative budgeting."

A spokeswoman for the district said Monday that officials stood by their letter to the comptroller, reiterating the district has never exceeded the 4 percent limit, "which has been confirmed by the district's external auditors."

Since January 2014, the comptroller's office has issued reports detailing what it described as excess budgeting in 10 Long Island school districts.

Brian Butry, a spokesman for the comptroller's office, said the office "has found this in other school districts around the state. School districts have to walk a fine line, when it comes to the fund balance and using it appropriately. But the law's the law; 4 percent is 4 percent."

By Olivia Winslow

olivia.winslow@newsday.com@newsollie