Amityville Finds Money!!!

[Go Plainedge!]

Amityville School District audit finds $2.9 million surplus

by Carolyn James

Amityville School officials announced recently that an audit has found approximately $2.9 million in the budget, additional money that cannot be used this year, but can be applied to next year’s budget for additional programs or to offset taxes as a result of other increases.

Superintendent of Schools Brian DeSorbe said that the additional funds are the result of several things.

"In some cases we underspent some of the lines in the budget while in other cases we had some one-time sources of revenue," he said.

In one case, for example, the district received half a million dollars in outstanding tuition from New York City, which had not been anticipated, while in another instance the district received $800,000 in unanticipated grants.

Prior to this year, the state permitted additional funds that are identified after the end of the fiscal year in June and before the district sets its tax levy, which in Amityville is September 1, to be included in the current year’s budget. Generally these monies would be put into line items for reserves for such areas as unemployment insurance, which is district run.

"In this charged atmosphere, the auditor informed us this year that there is a strict interpretation that we must comply with which states that any monies found after the close of our fiscal year must be used for the 06-07 year’s budget," said DeSorbe. "In an ideal world everything happens in sequence but in the real world that is not always the case."

School Board President Diane Egglinger did not return a reporter’s phone calls, but School Board Trustee Stephannie Andrews said that she believed some of the surplus revenue was the result of unanticipated funds that the district’s business office should have been aware of and included in the new budget.

"Whoever was in charge of doing that in the business office did not make sure they accounted for all the grant money that the district knew was coming in before the April deadline and before the budget was put to the public," said Andrews.

In addition, she said she believes the business office did not compare budget lines with actual use, which resulted in the lines being built up with increases that were not needed, year after year. "That, too, was the responsibility of those in the business office," she said.

Several school districts on Long Island have reported similar findings after recent audits. Locally, North Babylon, and West Islip each discovered approximately $2 million in funds that also cannot be used this year.

For districts like Amityville that are operating on austerity this year, that means having to continue doing with less.

One of the changes that many school officials are promoting at the state level is to allow schools to increase their reserve percentages. Under current state law, districts cannot have more than two percent of their budget in reserve, which DeSorbe points out is much less than the 10 to 20 percent recommended by state investment firms such as Moody’s Investors. These companies set the bond ratings for schools, as well as municipalities and businesses. Lower than recommended reserves, result in lower bond ratings, which translate into higher costs for borrowing.

"It certainly is a nice position to be in," said DeSorbe of the additional monies, who pointed out that financial restraint which resulted in the reserve came at a time when the district had two of its schools removed from the state’s schools in need of improvement list.

The school board will be discussing how it will handle the reserve funds, but DeSorbe pointed out that using it all for tax relief would leave the district in a financial hole the next year. "I would think that the best scenario would be to use some of it for tax relief, and some for one-time expenditures," he said.

[justfacts]

Go Plainedge! - and others.

What's remarkable to me is that the comments made by their Superintendent of Schools puts the "Same-Old Same-Old" twist on the information about how they are supposed to handle Public funds WHEN THEIR USUAL METHODS OF INTENTIONALLY PUTTING EXCESS PUBLIC MONEY GATHERED INTO FUND BALANCE OVERRUNS IS BROUGHT OUT INTO THE LIGHT OF DAY!

That $2.9 Million over the allowed cap of 2% is so typical of many School Districts! Plainedge had been chastised in the recent past (late '90s) for having more than twice the limit in its Unencumbered Fund Balance! As a result of an investigation they were formally told to encumber some of the funds, use the rest to reduce next year's property tax and - importantly - make sure they don't do it again!

Getting back to the recent Amityville's District getting caught with their hand in the Fund Balance "cookie jar". Indeed, they're trying to tell us that a known total of $1.3 Million from two income sources was "overlooked" in the Business office!? Come On! What about the rest of the $1.6 Million - making up the $2.9 Million total - that was also overlooked? Just "pocket money" that was laying around? What Board Stuff!

The Superintendent also told a big fat fib when he said that "Prior to this year, the State permitted ... etc." Fiscal guide books published by the State for the past few years, as well as Comptroller's Decisons given during the past few years - expressly state that it is a NO-NO to use year end unencumbered funds for any other purpose than to be applied to reduce property taxes of the coming year's budget! No unencumbered funds can be held onto - in the expectation that they might be designated as Encumbered during the upcoming Budget year! Clear as day is that ruling and regulation!

That superintendent - as well as many others in Nassau, should go back to school on these rulings and regulations.

Also the statement by the School Board President that "Whoever was in charge of doing that in the Business Office ..." is such a crock! The one in charge of the Business Office is the Superintendent - not an underling! And the one in charge of the Superintendent is the Board!

Buck passing - not dollar control - is their forte![/i]

Building up increases year after year - is not the fault of the Business Office. That is the direct result of the planned actions of the Superintendent! (and probably almost all superintendents) The School Boards are the ones responsible for letting the Superintendents get away with this practice! Obvioulsy - Checks and Balances are not coming into play.

As to Plainedge's "overages" on the Fund Balance this year - who wants to hazzard a guess as to how much over the 2% cap we're at? That's any amount over $1.2 Million (give or take a buck or two). I've got a very strong feeling that we're about $1.4 to 1.5 Million over - just like we were in the '90's!

Don't forget - an added $390,000 was dumped back into that account when the Packard Fund money transfer didn't get voter approval. That was not planned for in laying out the initial two Budgets. And it is - as finally acknowledged in the Amityville release - the State Auditor that informed them that they can't be used in the current year's budget! (Despite what Superintendent's may hint at or promise!)

[justfacts]

A recent post by me contained, in lieu of a report given by the District, an estimate of the Unencumbered Fund Balance that the District had at the start of this year.

In that post I also said that the District had exceeded the allowed cap of 2.0% of the total expenses for past years and the their exceeding the cap this year was probably in the amount of $1.5 Million - for a total of $2.6 Million, or by being about 4.6% of Expenses.

Hey!, I'll be the first to admit that this number is the result of "reverse engineering" indirect information to estimate the information that would be in such a Fund Balance Report if the District did supply one!

But just to give you some backup information to help support this "reverse engineering" estimate - let's look at data I ran across today, that is supplied by the State for the year's that Plainedge has already reported to them:

State Report on Plainedge School District Operations.

OPERATING SURPLUS OR DEFICIT
1998-99 1.2%
1999-2000 1.9%
2000-01 1.1%
2001-02 -2.0%
2002-03 3.3%
2003-04
2004-05
2005-06

UNRESERVED FUND BALANCE/TOTAL EXPENDITURE
1998-99 3.8%
1999-2000 5.4%
2000-01 5.5%
2001-02 3.7%
2002-03 4.7%
2003-04
2004-05
2005-06

So my "back door" estimate of 4.6% in Unencumbered Funds is right in line with the District's past performance in this excess of funds!

This also shows us just how "diligent" the State is when it comes to controlling School District finances! It seems they, like we, rely too heavily on the Board to review and control!

[justfacts]

Golly Gosh!

The last post isn't out but a few minutes and I've gotten e-mails challenging my statement about "reverse engineering"!

Well, heres' a copy of a prior e-mail that gave details of that analysis.

=========================================
Subject: What's a few Million in a 4 Billion dollar Industry?

Friend,

I hope all is well with you - and that you have happy holidays and a great New Year.

Look to the Subject of this memo - No! I didn't loose my mind. State reports show that in just Nassau County alone the School Districts planned to take in this year $4.03 Billion in operating funds! Mama Mia! - That's one heck of a lot of money just from this county!

I noticed on one Post on the Forum however, that there was a mention of the School District having $1.5 Million more in the Fund Balance than the permitted amount. I don't know if any individual or group considers that "inside information" or not - but I've come to the same conclusion that there is about that amount of overage sitting in the School's unreported funds. But least any one get too suspicious about how I got to that figure - here's how I determined it from obvious info that the School has supplied;

Starting from last year, they must have had at least the minimum 2% in the Unencumbered Fund Balance. That is about $1.1 Million on a $55.3 Million total Budget. The encumbered amount is anyone's guess - but at the Auditorium meeting about the Second Budget the prior year, they read to all of us some of the items in the Encumbered balance - there was at least $4 Million mentioned in Encumbered funds - retirement funds, insurance reserves, etc. They have never published a report to us about these monies (as they should each year) so the verbal data given is unreliable.

Begining this year - they had an excess of Revenue over Expenses of $1.8 Million - it's clearly shown on the Budget document (despite the $600,000 "innocent arithmetic error" by Burns!) So, the fund Balance starts out with $1.8 Million more than the limit. The Board decides that $700,000* of that is applied to reduce Property tax. That leaves $1.1 Million more than the limit in the Unencumbered fund. Now, since both Budget votes fail, the Packard Fund transfer into the Expense part of the budget is not able to be done. That adds $390,00 back into the Unencumbered fund balance - something the Board didn't expect to happen! The total amount? - - -$1,490,000! That is the $1.5 Million amount mentioned in the post almost to the dollar![/i]

So, all told now, there's about $1,1 Million in the Cap limit plus $1.5 Million in the overage - bringing the total Unencumbered funds to $2.6 Million (Remarkable, isn't it? That's about the same amount Amityville "just found" in their Unencumbered fund balance!!! Do these Superintendents work to the same goals?) That plus the Encumbered Funds runs to a total of $6.6 Million!

Gee Whiz! I hope the Encumbered amounts are legitimate!


Your friend in trusting and believing the School District's Budget numbers - Ed [e-mail]


*The Budget Summary sheet mailed to each home indicated a total of $1,090,000. But that was a combination of the $390,000 (going to expenses) and the $700,000 amount that did go to property tax reductions. The Summary Sheet lied to give the impression that more was going into Property Tax reduction than what really did go there! The same lie was used the prior year when Property Tax reduction was shown at $600,000. The $600,000 was actually the first part of the Packard Fund transfer which really went to buy an air-conditioner that was not planned for in the Bond issue for the School.

ZERO dollars went to Property tax reduction in the year before last! These lies on the Budget Summary were complained about in my Petition to the Commissioner.

[justfacts]

A different perspective on Budgets and "Cuts"

Everyone knows that predicting the future is an impossibility. One can only guess at what the cost for things will be in the upcoming year. So, at best, a Budget dollar amount is a "best guess". The ability to adjust one's spending, while working to a Budget limit goes onward during a year, allows us to finish the year at some amount close to the guessed at number. Typically and historically, in working on the Plainedge School Budget, this has resulted in spending to within about 2% of the approved Budget by the end of the year.

That amount of money amounts to 2% of $55.3 Million this year, meaning we would finish within +/- $1,100,000 of the approved limit.

The $55.3 Million Budget this year was about 4% more than the Budget limit last year. Although not the 8% asked for, it was an increase.

But, because it wasn't as much as asked for - at the beginning of the year about $0.5 Million of "Cuts" were made in some specifically singled out Programs. This caused a lot of donated money to be raised, by washing cars, etc., in order to restore these specific programs.

But from my comfortable and individual perspective on this whole picture - I begin to wonder why, when the accuracy of a guess about a Budgeted value that has a $1.1 Million uncertainty about it, why is it so necessary to make a full "Cut" of half that vague amount from just one part of the overall Budget? Couldn't the uncertainty of the amount have been distributed over a much wider base?

From a relevant, but quieter, perspective: When the School Board unexpectedly withheld about $27,000 in Library Funds from the Library's $2 Million Budget this year, that proportion of money is about the same as someone withholding about $3/4 Million from the School District's Budget! The Library Board is now faced with making distributed "cuts" in service during the entire year - and has not singled out a specific program to be impacted by this reduction in funds.

After all, just as the Budget was being implemented, someone's negligent action with KeySpan resulted in a "Cut" in the amount of the "guessed at" total money available! Why, also, are these negative changes accepted so readily without recovery actions being started - while "guessed at" amounts are used so precisely to determine whether donated funds toe the mark to the last dollar?

Why do we seem to treat a guess at next year's costs as absolute numbers cast in concrete - when we can't control this weeks expenses with the same absolute degree of accuracy? I'm referring to the Audit details that found about $16,000 in Expense Receipts by two School District individuals to be unsupported by adequate documentation. Yet, during the work of an Audit, only $6,000 of supporting documentation could be found - there was left in "limbo" $10,000 of unsupported Expenses. Why wasn't the amount to be raised by "Donations" allowed to have the same flexible dollar amount of "uncertainty" before it was deemed "good enough" to meet the uncertain - but seemingly absolute and rigid - goals of the total Budget?

Clearly, to me, there needs to be a greater degree of up-front flexibility in understanding and adjusting one's goals and targets during the casting of a Budget guess in stone at the beginning of a year. Or, in making precise surgical cuts in specific areas if one's guess at the Budget is not accepted prior to your beginning to work on the accepted Budget during the remainder of the year.

After all, the School Board and Administration does have the duration of a whole year of spending and cost reviews to work on to enable actual costs to be brought into line with pre-planned costs. That's their job - let them work at meeting it to the last dollar.