DiNapoli: Poor Budgeting Practices at Levittown UFSD
Lead to $16M in Excess Reserve Funds and a
$6M Operating Deficit
Inaccurate estimates on revenue and spending over several years led to a $6 million two-year combined operating deficit and $15.9 million in excess reserve funds at Levittown Union Free School District, according to an audit released today by State Comptroller Thomas P. DiNapoli.
“Accurate budgeting is essential for a school district to have a strong financial base and make sure taxpayers are not paying more property taxes than necessary,” DiNapoli said. “Levittown Union Free School District needs to accurately estimate its revenues and expenses and stop overfunding reserves.”
The audit, which covered July 2006 to September 2007, found that several years of poor budget practices caused the district to have a $6 million combined operating deficit for fiscal years 2005-06 and 2006-07 while at the same time the district placed $15.9 million in an excess reserve fund.
Auditors determined that for fiscal years ending 2004 through 2007, the district’s actual revenues varied from its estimated revenues by as much as $5.5 million. Its actual expenditures varied from its estimated expenditures by as much as $9.6 million during the same period.
In addition, auditors learned that district officials exceeded total budget appropriations authorized by the district’s voters, which is contrary to state Education Law. District officials failed to monitor the spending and revenues for the 2006-07 fiscal year and did not even know it had overspent its budget until July 2007, well after the 2007-08 budget had been approved and adopted by voters.
Auditors also found the district established an employee benefit accrued liability reserve, which was overfunded by $15.9 million because the district is not obligated to pay its employees for unused sick and vacation time when they leave the district making this reserve fund completely unnecessary.
DiNapoli’s audit also found the district:
- failed to request public bids for three contracts that exceeded the public bidding threshold;
- did not seek requests for proposals for procuring $795,225 in professional services;
- paid $22,950 in leave benefits that an administrator was not entitled to; and
- paid $1 million in overtime without evidence that it was authorized, necessary and actually worked.
DiNapoli’s office recommends that district officials:
- prepare and approve budgets that accurately reflect estimated revenues and expenses;
- closely monitor the district’s finances and take action to avoid overspending its budget;
- only establish reserve funds that are necessary;
- use reserved money as intended, and transfer excess funds to other authorized reserves; and
- compensate employees based on their contract terms and board resolutions.
District officials agreed with the audit’s recommendations and have already initiated corrective action to address some of the auditors’ concerns.
Click here for a copy of 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 Board of Cooperative Educational Services by 2010. The State Comptroller’s office has completed 600 school audits and approximately 155 school audits are currently underway.