Audit Reveals Excessive Fund Balance at WACS
By Sara Herrmann
POSTED: July 3, 2008
New York State Real Property Tax Law limits a school district’s unappropriated fund balance to 3 percent of the subsequent year’s budget. A recent audit of the Westfield Academy and Central School by the State Comptroller’s Office cites the district for having an unappropriated fund balance at the end of the 2006-07 fiscal year of $2.4 million, or more than 17 percent of the 2007-08 budget.
The unappropriated fund balance is the amount of unspent expenditures and revenues remaining at the end of the fiscal year not designated or reserved for future use. Traditionally, the unappropriated fund balance is utilized to either reduce tax rates of is set aside for unforeseen emergencies or expenditures. And while state education law will increase the allowable limit on unappropriated fund balances to 4 percent for the coming year, Westfield’s balance remains significantly higher than the allowable percentage.
The audit states that the Superintendent and Board of Education “caused the excessive fund balances by routinely overestimating appropriations and failing to estimate and include a portion of unreserved fund balance to reduce the tax levy.”
School Board President Stephen Zanghi and Superintendent Mark Sissel, in a written response to the audit dated May 13th indicated that the district, beginning in the 2009-2010 budget, will prepare estimates of projected year-end unreserved fund balance for Board consideration in developing future budgets and will examine the projected year-end unappropriated fund balance and appropriate as necessary to comply with the statutory requirements.
The district will also, according to Zanghi and Sissel, monitor operations and the budget so that revenue and appropriation estimates align more closely with actual activity as future budgets are developed and administered.
Zanghi calls the excessive unappropriated fund balance “almost accidental”. “We’ve tried to maintain a fund balance at the highest allowable level,” he explains. “It’s good for cash flow and we’ve been able to make money through investments.” He says the fund balance is due, in large part, to the district underestimating state aid and not spending the full proposed budget amounts in a given fiscal year.
He notes that, in rectifying the situation, the district will earmark a portion of the excess to tax relief and will allocate the remining funds into appropriated accounts.
