June 18, 2009
DiNapoli: Poor Budgeting Practices at Kenmore-Tonawanda
UFSD Lead to $22 Million in Excess Funds
Poor budgeting practices at Kenmore-Town of Tonawanda Union Free School District allowed the district to accumulate more than $22 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.
The audit, which covered July 2006 to October 2008, found that the district routinely overestimated expenditures by a total of $43.5 million from 2003-04 through 2007-08. For example, in 2007-08 the district budgeted $29.9 million for employee benefits even though the district’s own cost schedules estimated the costs for these expenditures to be $20.5 million.
The district also routinely underestimated revenues, primarily state aid and interest earnings, by nearly $23 million over the same five-year period. These inaccurate budget estimates caused the district’s revenues to exceed expenditures by $13.4 million.
Auditors determined the district exceeded the statutory limit for unreserved fund balance from 2003-04 through 2006-07 by one to two percent each year. To stay close to this limit, the district overstated liabilities, systematically increased reserve funds and trust accounts by $17.3 million over the five-year period, and appropriated $10 million of fund balance annually but never used the money. Through these actions, the district restricted more than $22 million that should have been used to benefit taxpayers.
DiNapoli’s audit also found problems with the district’s procurement practices, including:
DiNapoli’s office recommends that district officials:
The district’s full response is included in the audit. Click here to view the audit.
School District Accountability