BRASHER FALLS — A state comptroller audit of the St. Lawrence Central School District from July 1, 2017 to Jan. 31, 2019 found that the district was beyond the statutory limit for how much surplus was in their fund balance. Auditors reviewed fund balance and budgeting trends dating back to July 1, 2015.
“The surplus fund balance in the general fund exceeded the 4 percent statutory limit for the past three fiscal years,” auditors said in their report. “As of June 30, 2018, the District’s surplus fund balance was $2.15 million, which was 4.9 percentage points or nearly $1.2 million over the legal limit.”
But, Superintendent Robert Stewart said, there was a reason they were beyond the statutory limit — to save programs and positions after a “dismantling” of their educational programming during lean budgets years.
“It’s accurate, we are above the 4 percent. But the numbers don’t put it into context,” he said Thursday. “When you had to cut 29 positions in this decade and are trying to rebuild your academic program and trying to save money in your reserves, if there’s a downturn you don’t want to dismantle them again. We need to make sure we’re able to meet the needs of our kids and our programs here.”
Auditors also noted that, over the past three fiscal years, “The District appropriated fund balance and reserves that it did not use and generated operating surpluses totaling about $5 million. The District also overestimated appropriations by an average of $2.4 million each year or by 10.5 percent. During this time, total reserves increased by $3.9 million.
“We compared budgeted revenues and appropriations with actual results of operations from 2015-16 through 2017-18 and found that revenue estimates were reasonable. However, District officials overestimated appropriations by an average of $2.4 million each year, spending about $7.1 million less than budgeted over the three-year period (a 10.5 percent average budget variance),” auditors said in their report.
Among their recommendations was to ensure the surplus fund balance complied with the statutory limit and used surplus funds to fund one-time expenditures or needed reserves, pay off debt and/or reduce property taxes. They also recommended that the district develop a comprehensive multi-year financial plan.
In the district’s response letter to the report, Mr. Stewart said that, while they agree with the findings of the audit, there were circumstances that necessitated carrying an unexpended fund balance above the 4 percent limit.
“The District has carried an unexpended surplus balance above the 4% limit and has used this money to replenish reserves,” he said. “This was completed with a conservative approach to budgeting and a desire to assure the well-being of the school and academic program. However, what the numbers do not demonstrate is the context of events that have led to this action.”
Mr. Stewart noted that St. Lawrence Central School was a high-needs district with about 1,000 students, and enrollment had remained approximately even over the past decade.
“Although our enrollment has remained constant, our financial condition and the needs of our students has not,” he said. “The numbers of economically disadvantaged students and students with disabilities have increased. Enrollment has decreased in many local schools over the past decade but this isn’t the case at Brasher Falls Central. However, the price to educate our growing population of economically disadvantaged students and students with disabilities has increased.”
Mr. Stewart noted they were forced to cut 29 positions between 2010 and 2015 “in order to survive financially.”
“These cuts resulted in dismantling our educational program. By 2015, the District could barely offer students the classes necessary to attain a Regents diploma,” he said. “Upper-level students had multiple unnecessary study halls in their daily schedule or would leave after a half day simply because we couldn’t offer more classes. When we should have been preparing students for the jobs of the future, we were just trying to survive. By 2015 the passing rates on our NYS Regents examinations had dropped to 59%. We were a failing school.”
The superintendent said that during that time period they used reserves and reduced fund balance to “close the financial budget gap,” but their reserves “fell to dangerous levels” and they were on the state’s Fiscal Stress list from 2013 to 2015.
“Through conservative budgeting with recognition of our responsibility to provide a viable education program for our students now and in the future, the District has begun to rebuild its educational program and financial livelihood,” he said. “Twenty-one of the 29 positions cut have been reestablished and students are now receiving a solid education. Our Regents passing scores have risen to 82% passing and our 3-8 ELA and math assessment scores have seen double-digit increases.”
“The District recognizes the responsibility it has to the community and taxpayers,” Mr. Stewart said. “Over the past 4 years, the District tax levy increase has been at and below the allowable tax cap. Although it is accurate that the District had the unappropriated fund balance necessary to maintain a level tax levy, the security of our educational program and financial health took precedence.”