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July 11, 2012

 

DiNapoli: Cheektowaga-Sloan School District Should Better Manage Fund Balance


The Cheektowaga-Sloan Union Free School District has not properly managed its fund balance in accordance with state law and has accumulated more than $2.6 million that should be used to benefit taxpayers, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“It is essential that districts develop reasonable budgets and manage fund balances responsibly,” DiNapoli said. “The district should use any remaining excess fund balance to reduce the property tax levy, fund reserves, reduce debt or pay one-time expenses.”

DiNapoli’s auditors found that district officials consistently overestimated appropriations. As a result, the district had operating surpluses totaling $2.4 million in four of the last five fiscal years, and did not need to use most of the $3 million fund balance the board appropriated as a funding source in the general fund budgets over the last five completed fiscal years.

State statute limits the amount of unexpended surplus funds that can be retained by district officials to no more than 4 percent of the next fiscal year’s budget.

Auditors also found that despite its budgetary surpluses, the district increased its real property tax levy by approximately $2.3 million for fiscal year 2011-12, 18 percent over the prior year’s tax levy. As a result, taxpayers are paying more taxes than necessary.

DiNapoli recommended the district:

  • Adopt realistic budgets, using actual financial results from prior years to develop more reasonably projected expenditure levels;
  • Maintain unexpended surplus funds within the legal limits permitted in order to manage cash flow issues, unanticipated expenditures and/or revenue shortfalls in a more transparent manner; and
  • Develop a plan to use the surplus fund balance in a manner that benefits district taxpayers. In order to provide appropriate transparency, the use of this surplus should be done through the budget process with public disclosure. Such uses could include, but are not limited to:
    • Reducing district property taxes;
    • Funding necessary reserves;
    • Paying off debt; or
    • Funding one-time expenditures.

Cheektowaga-Sloan district officials generally disagreed with the findings and recommendations in the report. Their response is included in the audit.

For a copy of the full audit, visit: http://www.osc.state.ny.us/localgov/audits/schools/2012/cheektowagasloan.pdf



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