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Audit: Oysterponds overestimated fund balance by $1.6M

The Oysterponds Union Free School District has overestimated its fund balance by approximately $1.6 million over the past three academic years, according to a recent audit completed by the State Comptroller’s Office. 

Released last month, the audit examined the district’s financial condition from July 1, 2016, to June 30, 2019. The audit was conducted to determine whether the school board and district administrators are adequately managing the district’s budget and finances. 

In the audit, a fund balance represents residual funds that were budgeted but never used during prior fiscal years. New York State Real Property Tax Law limits the unassigned fund balance, or any part of the fund balance not designated for specific expenditures, to no more than 4% percent of the subsequent year’s school budget.

For the last three years, however, Oysterponds’ reported unassigned fund balances have ranged from 16.5% to 27.8% of the ensuing year’s appropriations — or four to seven times the statutory limit. 

“The Board adopted general fund budgets that significantly underestimated revenues and overestimated appropriations over the last three fiscal years,” the audit states. 

The school board did not adjust ensuing years’ budgets based on prior years — which resulted in a pattern of over-budgeting, the audit states. 

In a Jan. 6 letter to the state comptroller, Superintendent Richard Malone wrote that the district experienced an increase in nonresident student enrollment over the last academic year, which resulted in greater revenue.

The district also received an increase in revenue in the 2018-19 academic year, Mr. Malone wrote, after being reimbursed by a neighboring district for prior years’ summer programs.

Mr. Malone wrote that district officials are preparing a new strategic plan for 2020-25 that will address, among other topics, financial condition and capital projects. Officials plan to reduce the district’s unassigned fund balance in part by using it to pay for some planned capital projects, like updating the school’s heating and ventilation system and playground.

“As part of the strategic plan, district administration and the Board will review curriculum/program development, staffing, enrollment, capital projects, financial condition, and future budgets for the district,” Mr. Malone wrote.

Last month, the state comptroller released a list of school districts in fiscal stress. Oysterponds was not on the list, meaning it had little to no fiscal stress. 

Mr. Malone was not available for comment last week.