By EMILIA TEASDALE
CHATHAM—On August 11, the state Comptroller’s Office released the findings of a recent audit that determined the Chatham Central School District’s Board of Education and district officials “did not properly manage fund balance and reserves.”
The audit, on the comptroller’s website at www.osc.state.ny.us, found that the district’s “consistent practice of appropriating fund balance that is not needed and maintaining unreasonable reserve balances circumvents the statutory limit on surplus fund balance and lacks transparency.”
The school district released a statement in late August saying “the district and our external auditors respectfully disagree with the Comptroller’s opinion that the district holds too much money in reserves. We believe our reserves are appropriately funded and are essential for long-term planning and the future financial stability of the district.”
According to the state, the district annually appropriated over $1.3 million of fund balance “they did not need or use to finance operations; therefore, taxpayers were taxed more than necessary.” They also, on average, annually over-estimated appropriations by $3.2 million (9.9 percent), and maintained four reserves totaling $6.6 million without demonstrating they were reasonably funded.
“For example, the unemployment insurance reserve has about $747,000, enough to pay annual claims for 14 years,” and “workers’ compensation reserve has $1.4 million, but the average annual workers’ compensation expense is $79,756.”
According to the school district, the Comptroller’s Office spent several months in the district “reviewing our procedures, processes, and policies as part of their regular auditing of school districts in NYS. As we expected, the audit did not uncover any instances of fraud or malfeasance with our practices. The audit’s recommendations focus on the district’s management of fund balance and reserves, a topic on which the district and the Comptroller’s Office have a difference of opinion.
Office of the State Comptroller
‘… The unemployment insurance reserve has about $747,000, enough to pay annual claims for 14 years….’
Thomas P. DiNapoli
“It is our position that the district’s use of fund balance and reserves is appropriate and benefits taxpayers and students for the long term.”
The statement from the district says they must have enough flexibility in the budget to meet “worst-case financial demands” and that any contingent money that goes unspent is applied to reduce the “taxpayers’ burden the following year or is placed in a reserve account to offset expenses in future years.”
“The Comptroller’s claim that taxpayers paid higher than necessary taxes fails to take into account that the district’s current revenue is not sufficiently sustainable and that the district projects that its reserves will be severely impacted over the next ten years,” the statement goes on to say.
“Because state aid and the NYS property tax cap have not kept pace with cost increases in recent years, the district has utilized fund balance and reserves in the budget to reduce property tax increases over the past several years.”
The district also wanted to “reiterate that the Board of Education and administration are transparent with the public regarding the budget and finances of the district.”
The district’s response said district officials had reviewed the comptroller’s findings and recommendations of the audit and will take corrective action in certain areas. “While we respect the comptroller’s opinions as to appropriate reserve levels, we strongly feel that our approach has and will continue to provide the best possible education for our students in a fiscally responsible manner that is beneficial to our taxpayers.”
The district’s full response to the comptroller’s recommendations is included in the state Comptroller’s audit report, which is posted to the district website at
