State audit finds discrepancies in finances of Indian River Central School District

·3 min read

Sep. 10—PHILADELPHIA — An audit report released Friday by the state comptroller's office found that Indian River Central School District has more money in savings than it should, and unless the district makes changes, it will collect more in taxes than is needed.

Indian River Superintendent Troy W. Decker said that the state auditors were helpful and professional and the district learned some things as it worked through the process. However, in its response to the audit, district officials disagreed with many of the findings, stating that the problem is with the state's tax laws and not in the way the district manages its money.

The audit report states that board of education and district officials did not adequately manage the district's financial condition and the current findings and recommendations are similar to a November 2016 financial condition audit report.

From 2017-18 through 2020-21, the audit states that the board underestimated general fund revenues by $68.8 million; overestimated appropriations by $29.5 million; and purported the district would incur operating deficits totaling $75.5 million but had operating surpluses totaling $13.9 million after transfers, which led to operational shifts totaling $89.4 million. Additionally, the district's reported surplus fund balance as of June 30, 2021, was 10%, exceeding the statutory limit of 4%. When unused appropriated fund balance is added back, the recalculated surplus fund balance totals $27.8 million, which exceeds the statutory limit by $24 million.

The district contends that because of the way the state property tax law is written, 83% of north country schools and 60% of all state schools exceed the limit. The district also said the appropriated fund balance was significantly reduced for the 2022-23 school year and that auditors didn't take into account the uncertainty of the COVID-19 pandemic. The district also said it will continue to refine its budget process to make it more realistic.

"The District advocates that it is a reliable and conservative fiscal steward of taxpayer monies and will continue to manage the annual tax levies as responsibly as possible within the flawed framework of the NYS property tax cap legislation," the response states. "Given that 60% of all NYS school exceeded the law limiting unexpended surplus funds to 4% (with 83% of North Country schools exceeding that limit), it is the District's opinion these findings for schools across the state identify a problem with the Real Property Tax Law 1318 itself, not with the fiscal management of IRCSD or public schools across the state."

Key recommendations for the district include developing and adopting reasonable and realistic budgets and reducing surplus fund balance to comply with the statutory limit.

The audit states that the board and district officials have taken some steps to address prior audit findings and recommendations, such as establishing and financing reserve funds, funding one-time capital expenditures and reducing real property taxes two years in the audit period to help address surplus fund balance levels. Officials also returned money held in the debt service fund to the general fund following the last audit, However, based on current audit findings, the board and officials have not fully addressed several prior recommendations, auditors said.