Audit: Mattituck-Cutchogue UFSD has too much surplus

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07/17/2014 8:00 AM |


The Mattituck-Cutchogue School District has generated more than $5 million in surpluses and created an undue burden for taxpayers over the last three fiscal years, according to the findings of a state audit.

In January, state Comptroller Thomas DiNapoli’s office released an audit of the district’s financial operations and fund balance use between July 1, 2012, and July 31, 2013. The report indicates that monies the district moved into reserves during that period were “excessive and were not used.”

“These ongoing budgeting practices resulted in taxpayers paying more than necessary to sustain district operations,” the report states. “Had district officials used more realistic budget estimates, they could have avoided the accumulation of excess fund balance and possibly reduced the tax levy.”

In a July 5 Newsday article, Mattituck was named as one of six school districts that built up millions in cash surpluses over multiple years, creating unnecessary hardship for taxpayers.

Mattituck district administrator Michael Engelhardt told The Suffolk Times this week that the district’s conservative budgeting has been necessary under the state-mandated 2 percent cap. He said recent surpluses are the result of several factors, namely, not running into unexpected expenses — like paying for equipment breaking down — and receiving an increase in revenue from eight out-of-district tuition students. The district received about $55,000 per student and $100,000 for each special education student.

The district also realized savings of nearly $250,000 when its health insurance contribution rate dropped from 8 percent to 2 percent.

“I’m delighted we under-spent,” Mr. Engelhardt said. “We’ve always been right in the middle of the pack with our budget and tax increases. It’s not like we were budgeting tremendous amounts and hoarding it.”

The audit claims the district didn’t need to allocate as much money as it did into its dedicated savings accounts, known as reserves, which are designed to pay for very specific items. It recommends the district develop a plan for the use of future surplus funds, which Mr. Engelhardt said is currently in the works.

Like most districts, Mattituck has had reserves for certain expenses, including employee benefits and retirement costs. In recent years, the school board approved two additional reserve funds for unemployment insurance and workers’ compensation.

Another type of savings account, called an appropriated fund balance, contains monies that can be applied only to offset the tax levy.

Voters approved a $39.6 million budget in May, which reflected an $817,590 spending increase and carried an estimated 1.8 percent increase to the tax levy. During the budget process that preceded the public vote, the school board decided to use an additional $225,000 from the district’s fund balance to further offset the tax levy, totaling $1 million.

Mr. Engelhardt said the school board has been cautious about subsidizing the budget with too much fund balance because it isn’t a stable revenue stream and taxes would eventually spike.

Surplus, he said, will be applied to the district’s debt, which was one of the comptroller’s recommendations. There are the $11.9 million bond from 2000, which is expected to be paid off in 2018, and capital improvement bonds totaling about $26 million from 2006 and 2008 that are scheduled to be paid off in 2030.

“We certainly have places to put additional funds to prepay debt,” he said. “The report that the comptroller did was coming in from a different angle. Not that it’s wrong and not that it’s off-base. They’re just looking at it a little different than us.”

Click on the tab below to read the complete report, which includes a response from Mattituck school board president Jerry Diffley.

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