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What you need to know for 01/16/2018

Niskayuna district disputes audit citing 2011 budget glitch (with document)

Niskayuna district disputes audit citing 2011 budget glitch (with document)

The Niskayuna Central School District was faulted for using too much of its reserve funds in an audi

The Niskayuna Central School District was faulted for using too much of its reserve funds in an audit released Tuesday by the state Comptroller’s Office.

The audit, which covered July 1, 2010, through March 31, 2012, found that the district had miscalculated the amount of its fund balance — unspent money from previous budgets — at the end of the 2010-2011 school year.

School officials planned to spend $4.1 million at the end of the 2010-2011 school year to help fund the $73.7 million 2011-2012 budget. Of that, $1.1 million was to come from funds the district sets aside for tax challenges, debt payments and retirement contributions. The remaining $3 million was going to come from the so-called unrestricted fund balance, which is money that isn’t earmarked for anything.

View the audit here.

However, the district ended up with a deficit by taking more money from the fund balance than it actually had. The district was able to trim expenses and had a shortfall of only $265,000 rather than the $4.1 million it thought it was going to need. The audit cautioned the district that continuing to draw from the fund balance would result in its eventual depletion.

“An over-reliance of fund balance as a source to finance operations results in a lower tax levy for the current year, but it could also create a situation where the district needs to increase real property taxes if fund balance is no longer available for the subsequent year. The situation could result in the need for a tax levy in excess of the amount allowed by the tax cap statute,” according to the audit.

State officials’ recommendations were for the district to adopt a comprehensive fund balance policy that makes it clear to district taxpayers the amount of reserve funds and what they are for. School officials should also continually monitor the fund balance.

School officials issued a statement in response to the audit, saying it pointed out that the district has adequate oversight of finances. District officials plan to implement the recommendations. They disagree, however, with the assertion that they miscalculated the fund balance.

They said they tapped the surplus to help preserve opportunities for students in the wake of steep reductions in state aid. During the 2010-2011 year, the district had to spend $1.6 million because of two emergency projects: cleaning up soil at Niskayuna High School that stemmed from the discovery of an underground fuel tank at the start of the district’s capital project and connecting Glencliff Elementary School to Clifton Park municipal sewer to replace the failed septic system at the school.

In addition, the district lost $167,000 when the state announced a freeze on Medicaid reimbursement payments.

District officials addressed the deficit the following year by reducing spending and tapping into the reserves designated for specific purposes.

In a letter to the Comptroller’s Office, Assistant Superintendent for Business Matt Bourgeois said the district ended the 2011-2012 year with about $18,000 in unassigned fund balance and expects to end 2012-2013 with $800,000.

Superintendent Susan Kay Salvaggio said district leaders have always watched the fund balance closely and agreed on the need to maintain sufficient levels.

“Fund balance levels were not miscalculated at any time. The big picture is that our district has relied on fund balance to preserve student opportunities in light of multimillion-dollar losses in promised state aid that have persisted year-after-year. The two emergency projects and our reliance on reserves to maintain student programs depleted our unassigned fund balance for a time,” she said in a release.

This problem of overspending the surplus was also pointed out in a report last year by Moody’s Investors Service, which downgraded the district’s bond rating one notch from Aa2 — the third-highest rating — to Aa3.

It also criticized the district because its total reserves dropped from $11.6 million at the end of the 2009-2010 to about $7.3 million in 2012. Much of that surplus is designated for specific items such as tax challenges and retirement costs.

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