Comptroller: Worcester School District has too much fund balance

·3 min read

Sep. 8—The state comptroller's office recently audited the Worcester Central School District and said the district's fund balance was too high.

Auditors reviewed financial records of the district from July 1, 2016 through June 22, an audit report said. Auditors found the board of education and district officials did not properly manage fund balance in accordance with statute. It said:

—The board overestimated appropriations from 2016-2021 by an average of $943,000, or 8%.

—District officials budgeted for operating deficits totaling $4.7 million from 2016-17 through 2020-21, but experienced net operating surpluses totaling $1.2 million.

—The surplus fund balance exceeded the 4% statutory limit in each of the last five fiscal years by $490,000 to $1.8 million, or 4.3% to 15.7%.

New York State Real Property Tax Law Section 1318 limits the amount of surplus fund balance a school district can retain to no more than 4% of the following year's budget, the audit said. Any surplus fund balance must be used to reduce the property tax levy or fund needed reserves, the audit said.

The audit said the district overestimated its appropriations the past five years. "For example, during this period, the Board overestimated expenditures for tuition for daytime programs for students with disabilities each year by an average of $142,900 (28 percent) and health insurance each year by an average of $128,200 (9 percent)," the audit said.

Superintendent Timothy Gonzales addressed the appropriations in a letter of response, "While the audit reports references an average overestimation of $142,900 in Special Education tuition, that figure represents an average of just two children moving into the district and the programs necessary to provide them with an appropriate education to meet their needs. In addition, the health insurance overestimation identified in the report of $128,900 can be a matter of five employees changing from a contractual health insurance buy out option to participating in a family insurance plan."

Gonzales also explained the district budgeted extra money into the 2020-2021 school year after then Gov. Andrew Cuomo announced in the spring that school districts may lose 20% of its state aid due to the pandemic. All districts were funded 100% that year.

He also said in the letter the district was in discussion with the Schenevus Central School District for an annexation merger from July 2019 through Dec. 1, 2021, when the merger was rejected by Schenevus voters. "With the uncertainty surrounding the merger and the financial deficit of the Schenevus school district, WCSD determined it was not prudent to move funds into various reserves during that time period.

"Throughout the audit process they had informed us they were going to focus on the fund balance," Gonzales said in an email Thursday. "However, we were surprised that the COVID-19 pandemic, the cuts that Governor Cuomo had threatened to impose on State Aid for all schools, and the possible merger with the Schenevus Central School District were not taken into consideration. Those items directly impacted our fund balance."

He said the pandemic "had a large impact on the budget and made it difficult for budget planning. The many transitions to remote and in-person learning, limiting activities and extracurriculars and not knowing what would be allowed for students over the pandemic years made it extremely difficult to know when, and if, certain expenses would happen or not happen."

Gonzales said in May voters approved putting $1 million into a capital reserve fund for future construction projects.

Vicky Klukkert, staff writer, can be reached at vklukkert@thedailystar.com or 607-441-7221.