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October 7, 2009

Comptroller Audit Recommends Improvement
in Use of Reserve Funds at
West Irondequoit School District

The West Irondequoit Central School District allocated money to certain reserves in excess of what was reasonable, according to an audit released today by State Comptroller Thomas P. DiNapoli. The audit reviewed the district’s reserve funds and selected financial transactions for the period July 1, 2007 through April 17, 2009.

“We all understand that this is a time of fiscal challenge for local governments including school districts,” DiNapoli said. “However, over funding reserves reduces the dollars available to provide relief to local property taxpayers.”

DiNapoli’s audit found district officials did not properly establish or use certain reserve funds. In addition, district officials did not properly record retiree health insurance costs and related liabilities. As a result, more than $7.1 million, which could have been classified as general fund unreserved fund balance and could have been used for district operations, was either accumulated in reserve funds or recorded as a district liability. As of June 30, 2008, the district had seven reserve funds with a cumulative balance of more than $7.2 million; approximately $4.1 million should not have been reserved and could have been used to reduce taxes. Moneys in these reserve funds could be transferred to other legally established reserves or transferred to the general fund, as authorized by the General Municipal Law and Education Law.

DiNapoli’s auditors also found that district officials overstated approximately $3 million in liabilities. If these liabilities had been correctly reported as part of the general fund unreserved fund balance, by law, real property taxes would have been reduced to comply with the statutory limits for fund balance.

DiNapoli’s audit recommends that district officials:

  • Adopt a policy to establish how reserves will be funded, the maximum balance that will be accumulated, and how the reserve will be used;
  • Review all reserves to determine if the amounts reserved are necessary and in compliance with statutory requirements, and transfers should be made in compliance with statutory directives;
  • Use the surplus fund balance identified in this report to provide relief for taxpayers; and
  • Ensure that liabilities are recorded in conformance with GAAP and are not used to lower the district’s end-of-year fund balance. The unreserved fund balance should be used in accordance with statute to provide taxpayer relief.

District officials disagreed with a number of the audit’s findings. A copy of their comments is included in the audit.

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 Boards of Cooperative Educational Services by 2010. The State Comptroller’s office has completed 655 school audits and approximately 75 school audits are currently underway.


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