School District Overestimated Expenses By $14.2M, Audit Says

By Jano Tantongco

jtantongco@longislandergroup.com

Huntington School District Superintendent James Polansky, center, said in a written response to the Office of the New York State Comptroller Thomas DiNapoli that the district overestimated expenses for three fiscal years from 2012-13 through 2014-15 due to unforeseen financial situations, including the delayed re-opening of the Jack Abrams STEM Magnet School.

The Huntington School District overestimated expenditures by around $14.2 million over a three-year period, creating a tax levy that “may have been higher than necessary to fund District operations,” according to an audit released earlier this month by the Office of the New York State Comptroller Thomas DiNapoli.

The audit examined three fiscal years from 2012-13 through 2014-15.

According to the audit, for the 2012-13 year, the district underspent by $6.29 million. During the 2013-2014 year, the district underspent by $2.99 million. And during the 2014-2015 year, it underspent by $4.92 million.

On average, the audit said, the district spent approximately $4.7 million less than planned each year, leading to a surplus and leaving its fund balance untapped.

A fund balance is the difference between revenues and expenditures. If operating expenses exceed budgeted expectations and create a deficit, the fund balance from prior years can act as a resource to cover those costs. In establishing a budget, the district assigns a portion of fund balance to cover budget items that might exceed projections. The remaining fund balance is considered unassigned, or a “rainy-day fund.”

According to the state, unassigned fund balances cannot exceed 4 percent of the next year’s budgeted appropriations.

The comptroller’s audit states that the district appropriated enough fund balance to make “it appear that the District’s unassigned fund balance was within the 4-percent statutory limit.” The unassigned fund balance for each of the three years examined all came in at exactly 4 percent of the next year’s appropriations.

However, since the district ran a surplus each of the three fiscal years, the audit states that the assigned fund balance was not needed and rolled over into next year’s budget.

The audit states that if the unused assigned fund balance was recalculated as “unassigned,” the district would be overstepping the statutory limit, coming in at 5.9 percent for 2012-13, 5.9 percent for 2013-14 and 5.7 percent for 2014-15.

Brian Butry, deputy press secretary for the state comptroller’s office, said this finding “isn’t exclusive to Huntington.”

“This is something we’ve found across Long Island in school audits that we’ve done,” he said. “School officials, for whatever reason, are using this strategy when budgeting. When we find this, we are obviously going to point out the issue.”

In a written response to the audit, Huntington Superintendent of Schools James Polansky said “the district acknowledges that in the years examined, the level of appropriated fund balance did not represent the amount needed to support an actual operating deficit.”

He continued, “Our budget is an estimated spending and revenue support plan. As such, the District will continue to appropriate fund balance at a level estimated to address a potential operating deficit, but will always strive to spend within budget constraints and access available revenues to offset that spending.”

Polansky, who said that the district has been transparent in its budgeting process, added that “appropriations have served to reduce the tax levy each year.”