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July 16, 2009

 

DiNapoli: Budgeting Practices at Sweet Home CSD Lead to $7.6 Million in Excess Funds

Budgeting practices at Sweet Home Central School District allowed the district to accumulate approximately $7.6 million in excess funds that should be used to benefit taxpayers by paying for one-time expenditures, reducing debt or reducing the tax levy, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“School districts need to accurately budget expenses and revenues to build a strong financial base and make sure taxpayers are not paying more property taxes than necessary,” DiNapoli said. “Sweet Home Central School District needs to better estimate its revenues and expenses, and not overfund reserves.”

The audit found that district officials consistently overestimated expenditures and underestimated revenues by a total of $17.9 million from 2003-04 through 2007-08. The district overestimated expenditures by a total of $7.8 million and underestimated revenues by $10.1 million for the same period.

The budget estimates resulted in a cumulative operating surplus of $7.9 million at the district from 2003-04 through 2007-08. During the same period, the tax levy increased by $5.2 million from 2003-04 to 2007-08.

Auditors reviewed the district’s five reserve funds, which contained $7.4 million, and determined that district officials did not provide adequate justification for the funding of the debt reserve which had $3.5 million. In addition, the district did not have adequate documentation to support the funding levels of the $2.2 million workers’ compensation reserve and the $300,000 tax certiorari reserve. The district also allocated money in the general fund to pay for workers’ compensation expenses.

DiNapoli’s audit also found the district’s procurement practices lacked adequate documentation to determine if the district followed its own procurement policy and General Municipal Law.

DiNapoli’s office recommends that district officials:

  • prepare budgets that accurately reflect estimated revenues and expenditures;
  • use surplus funds in a manner that benefits taxpayers such as to pay off debt, finance one-time expenditures or reduce property taxes; and
  • properly report and use statutorily restricted moneys to pay debt and return any other moneys to unreserved fund balance.

The district generally agreed with most of the audit’s findings and the district’s full response is included in the audit. Click here to view the audit.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s school districts and Boards of Cooperative Educational Services by 2010. The State Comptroller’s office has completed 630 school audits and approximately 130 school audits are currently underway.


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