State Audit Finds Fredonia Central School Overestimated Spending

A state Comptroller’s Office audit of the Fredonia Central School District found that the district overestimated spending in its budgets over three years to create a fund balance that is 7 percent higher than the state limit.

The audit states the school board overestimated spending by more than $5.7 million over a three-year period resulting in annual operating surpluses and a fund balance increase of more than $2 million (52 percent).

As of June 30, 2017, unrestricted fund balance totaled more than $3.3 million and was 11 percent of the 2017-18 budgeted appropriations, exceeding the statutory limit by more than $2.1 million, or 7 percentage points.

The audit recommends the district:

¯ Develop and adopt budgets that include realistic estimates for appropriations and the amount of fund balance that will be used to fund operations.

¯ Develop a plan to reduce unrestricted fund balance to within the statutory limit and use the excess funds in a manner that benefits district residents. Such uses include, but are not limited to, paying one-time expenditures, reducing property taxes or building up necessary reserve funds.

¯ Adopt a comprehensive fund balance and reserve policy to include targeted funding levels and conditions under which reserves will be used and replenished.

District officials disagreed with certain aspects of the audit’s findings and recommendations, but indicated they planned to initiate some corrective action.

“The administrator stated that he annually overestimates utility and debt service costs for fund balance purposes, and that he budgets for one to two extra special education students and an extra out-of-district bus route due to the highly variable nature of these costs,” the audit states. “However, budgetary practices that overestimate appropriations can result in tax levies that are higher than necessary.”

Jeffrey Sortisio, district superintendent, said in his response letter to the audit that the district either had implemented or is implementing some of the recommendations. At the same time, Sortisio wrote that the district’s budgets are financially conservative so that the district can maintain programs regardless of state aid uncertainty.

“Fredonia CSD acknowledges that it is the duty of the Office of the Comptroller to audit school districts in the state and to make recommendations to improve accountability and financial practices,” Sortisio wrote. “Having said that, it is also the duty of school districts in (New York state) to maintain solvency through careful financial planning. When (New York state) reduced state aid through the Gap Elimination Adjustment, Fredonia CSD was able to sustain all academic, extracurricular and athletic activities through available budgetary funds. In the absence of these funds, the district would have been faced with catastrophic cuts to staffing and elimination of numerous programs. The district needs to budget conservatively to maintain and improve current programming.”

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