Weekly Feature

2017-10-12 / Front Page

State audit criticizes Cheektowaga-Sloan officials for excessive funds

District response takes issue with findings

According to a recently completed audit by state Comptroller Thomas Di- Napoli’s office, the Cheektowaga Sloan School District has been routinely overestimating by millions of dollars the money it needs to cover expenses.

In a recent release, which announced the results of seven school district audits, the comptroller’s office reported that from 2013-14 through 2015-16, Cheektowaga Sloan’s Board of Education and district officials overestimated yearly budget expenses by an average of $4.6 million.

The office argued that due to that error, the approximately $2.2 million in fund balance, or surplus, the district allocated per year to help finance the budget during that period was unnecessary.

“No amount of fund balance was used to finance operations because the board and district officials overestimated appropriations each year by an average of $4.6 million (16 percent),” the office stated in its report. “As a result, the district experienced cumulative operating surpluses totaling $8 million from 2013-14 through 2015-16.”

The office also indicated that officials reported that the district’s unrestricted fund balance for 2013-14 through 2015-16 was within the statutory limit, when in reality it had exceeded it by more than $2.7 million.

This, the office said, was because the district’s business manager, Wayne Drescher, had improperly recorded a prior period adjustment, which is a way to fix accounting errors and adjust for financial changes that occurred in a previous year.

Additionally, the comptroller’s office argued that Cheektowaga-Sloan’s Employee Benefit Accrued Liability Reserve was “excessive when compared to the potential costs which could be paid from the reserve.”

In a written response, district officials disagreed with the audit’s conclusions, arguing that Drescher’s adjustment had not been improper but was a “necessary and critical correction” to avoid paying more than $1 million per year in principal and interest related to debt for a capital project from 2005-06.

They argued that they found the “major error” only last year, explaining that a previous administration had set the repayment period for capital project debt at 20 years, when the district was only set up to receive state aid for 15.

“When this was discovered by new district administration during the 2015-16 fiscal year, it was determined that the district had been receiving excess aid on the project for the past 10 years, and that in just five more years, the NYS building aid would no longer be received,” the district stated, adding that the state Education Department refused to adjust the repayment period because the debt was 10 years old and final cost reports had been submitted.

Officials argued that their actions were justified and that unrestricted fund balances were within statutory limits, citing Government Accounting Standards Board regulations and financial guidance provided by the comptroller’s office.

Concerning the report that the size of the district’s Employee Benefit Accrued Liability Reserve was “excessive,” officials contended that since 2011-12, the district has “built reserves for unforeseen events” and argued that this practice is recommended in the comptroller’s local government management guide on reserves.

They reiterated that the district’s financial situation was exceptional due to the mistakes of others and expressed disappointment that the comptroller’s audit did not comment on approximately $1 million in reductions related to staffing cuts, consolidation of services and other adjustments the district has made in the last three fiscal years.

“We agree that the district did not spend its annual budgeted appropriations, but we feel this is a sign of upright fiscal management and restraint,” officials wrote. “These reductions in appropriations and actual expenses were the result of some very difficult decisions that we felt were necessary and in the best interest of all district stakeholders.”

To read the comptroller’s complete report and the district’s full response, visit http://www.osc.state.ny.us/localgov/ audits/ schools/2017/cheektowaga sloan.htm.

email: arizzo@beenews.com

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