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January 21, 2010



Rush-Henrietta CSD Could Have Used Excess Funding to Cut Taxes

The Rush-Henrietta Central School District built up more than $19 million in reserves and $3 million of excess fund balance, much of which could have been used to reduce taxes, according to an audit released by State Comptroller Thomas P. DiNapoli. Additionally, district officials consistently overestimated expenditures and underestimated revenues, resulting in unnecessary annual operating surpluses and fund balance increases totaling $19.5 million over a five year period. The audit covered the period July 2007 to August 2009.

"All across New York, families are watching every dime," said DiNapoli. "School districts should be doing the same thing. School officials should use education funding to fund education and necessary education expenses, and give taxpayers back whatever is leftover."

DiNapoli's auditors found a pattern of adopting budgets that generated more revenue than needed for district operations, and then placing this excess funding into reserve funds where it remained unused for school programs, operations or tax reduction.

Among auditors' findings:

  • Reserve funds contained $19 million for which officials had no apparent plan to use the money;
  • The district granted 21 employees an additional 1,266 days of sick leave without board approval. Three retired and were paid almost $16,000 for these additional days. The remaining 18 were still district employees as of the completion of the audit. Depending on how these additional days are used, the potential cost to taxpayers could fall between $66,000 and $392,000; and
  • The district procured services of three professional services without the use of Requests for Proposals or any other form of competition. These included $81,458 for legal services, $33,438 for physician services, and $132,575 for engineering services. This failure increased the risk that the district will pay more than necessary for these services.

DiNapoli recommended that the district:

  • Develop revenue and appropriation estimates for the annual budget that are realistic, and monitor financial activity to ensure operations stay within the budget;
  • Adopt a comprehensive policy on reserve funds establishing targeted funding levels, and a plan on how fund assets will be utilized or replenished;
  • Include information on the funding of reserves in its annual budgets to provide increased transparency for district voters and taxpayers;
  • Ensure reserve funds are used in accordance with the law;
  • Determine if the moneys reserved are necessary and comply with statutory requirements. To the extent that they are not, officials should transfer the moneys to unreserved fund balance or other reserves, in compliance with the law;
  • Use any surplus fund balance moneys for such purposes as:
    • Increasing necessary reserves;
    • Paying off debt;
    • Financing one-time expenses;
    • Reducing district property taxes;
    • Provide benefits only to employees who are legally entitled to them;
    • Cancel unauthorized sick leave provided to employees and recover any payments made on account of that leave time; and
    • Award contracts to professional service providers only after soliciting competitive proposals.

District officials generally disagreed with DiNapoli's findings. Their comments and OSC's response to these comments are contained in the audit report. For a copy of the audit, visit: http://www.osc.state.ny.us/localgov/audits/schools/2010/rush-henrietta.pdf.

School District Accountability
In order to improve accountability of the state's schools, DiNapoli's office will have audited all of New York's school districts and Boards of Cooperative Educational Services by 2010. The State Comptroller's Office has completed more than 725 school audits.

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