ALEXANDRIA BAY — An audit of the Alexandria Central School District was released Friday by state Comptroller Thomas P. DiNapoli, citing various findings related to the district’s budget and fund balance.
Key findings of the audit include that district officials did not adopt reasonable budgets and adequately manage financial condition during the audit period, budgeted appropriations from 2016-17 through 2018-19 exceeded actual expenditures by $844,261, or 6.4%, surplus fund balance in the general fund exceeded the 4% statutory limit for the past three fiscal years — as of June 30, 2019, surplus fund balance was $1.75 million, or 12.8% of the next year’s budget.
The audit further found district officials have not developed a long-term financial plan or a comprehensive reserve fund policy, and officials did not implement the recommendations in an audit report released in March 2016 containing similar findings and recommendations.
According to the audit, the following items were overestimated: medical and dental insurance at 12.6%, contracted transportation at 100%, BOCES services for special needs students at 17%, serial bond interest at 45.2%, and transportation services supplies at 41.7%. The remaining overestimated appropriations were distributed throughout the budget.
During the same three-year period, according to the audit, the district appropriated a total of $2.9 million in fund balance and reserves expecting planned operating deficits in that amount.
But because of the overestimated expenditures described above, the district actually generated total operating surpluses of about $91,5004 during the same period. The audit projects that the district will generate another operating surplus in 2019-20 and will not need to use the $925,000 fund balance appropriated in the budget.
In response to the audit, the Alexandria school district sent a letter from Superintendent Christopher Clapper and Board of Education President Jane Aikins that reads, in part:
“On behalf of the Board of Education and the District’s administration, we would like to thank the local field staff of the Comptroller’s Office. While the District does not dispute the findings of the report, we feel that any report which fails to cite the volatile and restrictive economic climate in which the District has been forced to operate is incomplete at best.”
Referenced in the district’s letter, the “tax cap” was described as initially limiting the district’s ability to correct year-to-year financial imbalances through taxation. The district noted that without significant increases in state aid, and with limited taxing authority, its only defense of student programs was a fund balance.
“The District believes it did not ask the taxpayers for one dollar more than was necessary to efficiently operate the District with no loss to any of its outstanding programs,” the letter reads.
The district’s letter also noted that with little or no revenue increase from taxation and a decrease in state aid, fund balance will shrink and once gone, programs will be dismantled.
The district also noted that when it adopted its budget for the 2019-20 school year, it could never have predicted the financial impact from the COVID-19 pandemic.
In its letter, the district cited that it has consistently taken a conservative approach to budgeting that includes taking a long-term view in budgeting processes and the strategic use of reserves.
Audit recommendations for the district include developing and adopting budgets that include more reasonable estimates for expenditures and amounts of fund balance that will be used to fund operations, developing a plan to reduce surplus fund balance to comply with the statutory limit and use excess funds in a manner that benefits district taxpayers, developing and adopting a long-term financial plan to provide a framework for future budgets and guide the district’s management of financial condition, updating the reserve fund policy to address targeted funding levels, and preparing and reviewing an annual report on reserve funds as required by the district’s reserve fund policy.
In response to the recommendations, the district agreed with the examiners that adoption of reasonable, realistic budgets is a priority.
The district stated it will continue to appropriate fund balance to reduce the amount required to be raised via the tax levy, and it is actively funding its Capital Reserve Fund in anticipation of its next project.
District officials are currently preparing a long-term multiyear capital and operational plan and approved the Reserve Plan at its April 2020 Board of Education meeting.