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NYS Comptroller

THOMAS P. DiNAPOLI

Press Releases

October 16, 2013, Contact: Press Office (518) 474-4015

DiNapoli: Audit Finds Excessive Surplus Funds in Mt. Sinai School District

 

The Mt. Sinai Union Free School District in Suffolk County overestimated expenditures five years in a row creating surpluses that exceed statutory limits, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“School districts have a responsibility to taxpayers to develop realistic budgets and make adjustments when it is clear budgets are out of line,” said DiNapoli. “District officials should engage the public to determine how to use these excess funds.”

DiNapoli’s auditors found that school officials consistently presented, and the board approved, budgets which significantly overestimated spending. Actual expenditures were $3.4 million less than budgeted amounts in 2007-08; $4.8 million less in 2008-09; $5 million less in 2009-10; $6.2 million less in 2010-11 and $4.1 million less in 2011-12.

During this five-year time frame, the district overestimated employee benefits by nearly $7 million; programs for children with handicapped conditions by approximately $5 million; central services by approximately $3 million; teaching costs by more than $2 million; and pupil services by more than $1 million.

As a result of these budget variances, the district’s unexpended surplus funds continued to grow – ranging from 6 percent to 14 percent of budgeted appropriations. The state’s Real Property Tax Law, however, limits the amount of unexpended surplus funds that school districts can legally retain to 4 percent.

These budgeting practices continued even though the district’s last five independent audit reports advised the school board that the district exceeded the unexpended surplus funds’ statutory limit each year.

DiNapoli also noted that during the same five-year period, the district’s tax rate increased from $1,792 per $1,000 of assessed value in 2007-08 to $2,351 per $1,000 of assessed value in 2011-12.

Moving forward, the comptroller recommended the school board:

  • Develop and adopt budgets that include realistic estimates for revenues, expenditures and unexpended surplus funds;
  • Discontinue the practice of adopting budgets that result in appropriating unexpended surplus funds that will not be used to sustain district operations;
  • Ensure that unexpended surplus fund amounts are within statutory limits; and
  • Develop a multiyear plan that addresses the use of unexpended surplus funds in a manner that benefits the district taxpayers.

School district officials agreed with several audit findings and indicated they would follow through on a number of recommendations. The district’s complete response can be found in the final audit report: http://www.osc.state.ny.us/localgov/audits/schools/2013/mountsinai.pdf

For access to state and local government spending and nearly 50,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.


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