The Office of the New York State Comptroller is recommending that the Alexander Central School District and Board of Education take several corrective measures after an audit issued on Sept. 11 revealed that the district did not follow “applicable statutes” when allocating reserve funds and overestimated appropriations from 2015-16 through 2018-19.
According to the state report, district officials generally agreed with the Comptroller’s findings and recommendations and indicated they have initiated or planned to initiate corrective action.
The Comptroller’s office conducted the audit to determine whether the board and district officials properly used and managed fund balance and reserves.
Its key findings of the audit performed for the period July 1, 2015 through Feb. 21, 2020 show:
- While the Board and District officials used $3.1 million in excess reserve funds as a financing source for a capital project, they did not do so in accordance with applicable statutes;
- Appropriations were overestimated by a total of $7 million from 2015-16 through 2018-19;
- An average of $500,000 of fund balance was appropriated each year, but was not used to finance operations. When unused appropriated fund balance is added back, surplus fund balance exceeded the limit each year by $345,000 to $611,000, or 2 to 3 percentage points.
As a result, the Comptroller’s office put forth four recommendations:
- Develop and adopt budgets that include realistic estimates for appropriations and the amount of fund balance that will be used to fund operations;
- Discontinue the practice of appropriating fund balance that is not needed or used to fund operations;
- Use reserves in accordance with legal requirements;
- Ensure that financing plans for capital projects are properly documented in the Board’s minutes.
This is the second time the state Comptroller's office found issues with the district's budgeting process as an audit issued on Feb. 19, 2017 for the period of July 1, 2010 through Aug. 4, 2015 pointed to similar issues:
- District officials consistently overestimated expenditures during the last five fiscal years, which generated approximately $2.4 million in operating surpluses and appropriated an average of approximately $670,000 in fund balance annually, which was not needed to fund operations due to operating surpluses;
- District officials used approximately $2.5 million of fund balance to fund seven reserves that totaled approximately $5 million. Three of these reserve funds are overfunded.
The key recommendations at that time were to develop realistic estimates of expenditures and the use of fund balance in the annual budget, and to use the excess amounts in reserve funds in a manner that benefits district taxpayers.
In response to the latest audit report, a letter to the Comptroller’s Office dated July 14, 2020, from Superintendent Catherine Huber, Ed.D., and Board President Brian Paris indicated that the “current public health landscape (COVID-19 pandemic) and the financial impact on school districts as well as the uncertain nature of school funding makes a response to the Comptroller’s audit particularly challenging.”
They wrote that the district “consistently has taken a conservative approach to budgeting “and that “these practices have served our taxpayers well …”
The letter indicates that district will act, effective July 14, to meet the audit’s recommendations, including monitoring fund balances, and developing realistic budget estimates by using zero-based budgeting – specifically stating that the 2020-21 budget salary estimates have been calculated as actual.
“The district is currently using Appropriated Reserved Fund Balance to balance the current budget,” according to the letter, which states that Huber and Business Administrator Tim Batzel will be responsible for the implementation of the recommended changes.
The Alexander Central School District serves the towns of Alexander, Batavia, Bethany and Darien in Genesee County and the towns of Attica, Bennington and Middlebury in Wyoming County.
It has a five-member board of education that is responsible for managing and controlling the district’s financial and educational affairs, the superintendent is responsible for the district’s day-to-day management under the Board’s direction and the business administrator maintains financial records.
According to the latest report, enrollment is at 826, with 162 employees, and 2019-20 appropriations totaled $18.2 million.
