Audit criticizes Odessa-Montour's funds

ODESSA (7/27/16)--The Office of the New York State Comptroller released their findings on the financial condition of the Odessa-Montour Central School District July 15. The audit found the school board and district officials overestimated general fund appropriations, exceeded the statutory limit for unrestricted fund balance and did not have a formal policy for its six reserves. The audit covered the period between July 1, 2012, and Feb. 2, 2016.
"The board and district officials did not adequately manage the district's financial condition," according to the audit. "They overestimated general fund appropriations when preparing and adopting the last three completed fiscal year's budgets, which resulted in operating surpluses totaling $2.5 million. During this period, the district increased the tax levy by a total of 2 percent and appropriated fund balance totaling approximately $1.8 million and reserves totaling $128,000, which were not needed to finance operations as planned. As a result, the district's unrestricted fund balance has more than doubled to $2.2 million during our audit period."
The audit goes on to say the district had three reserves totaling $782,596 as of June 30, 2015. it goes on to say these reserves were "overfunded, incorrectly recorded a deferred revenue totaling $453,301 and overstated a liability totaling $59,870, which further increases the excessive amount of unrestricted fund balance."
"When combining the unused appropriated fund balance and reserves with the other overstatements and excesses, the district's recalculated unrestricted fund balance was between 13 and 26 percent of the ensuing year's appropriations during our audit period, significantly exceeding the 4 percent statutory limit," according to the audit. "The district also has more than $1 million in the debt service fund available for debt payments that has not been used to finance debt payments, and it continues to accumulate money each year."
According to the comptroller's audit, the school board continued these budget practices into the 2015-16 fiscal year, as the adopted budget's appropriations exceed the previous year's actual expenditures by more than $1.75 million. Because of this, the audit anticipates the $492,377 appropriated in the 2015-16 budget will not be needed to help finance 2015-16 operations and restricted fund balance will again exceed the statutory limit and continue the trend of annual increases.
"Therefore, district officials have raised more taxes than necessary to fund district operations," according to the audit.
Superintendent Chris Wood issued a response to the audit dated May 26, which highlights "an administrative personnel transition period" at the district during the 2014-15 year, noting the three superintendents and two business officials who occupied these respective roles during that time.
"This change in personnel was a significant factor contributing to many of your recommendations," Wood said.
Wood also stated the district had taken the initiative to lower the tax levy for 2015-16, as well as the 2016-17 adopted budget, noting the overall levy from 2013 to 2016 has been "virtually the same." He added while developing the 2015-16 and 2016-17 budgets, the district took steps to contain expenditure growth in the overall budget, which was expected to reduce the amount of excess budgetary appropriations going forward. Wood also highlights shared services initiatives for transportation services and changed health insurance providers to contain expenditures, which he called "a contributing factor for the reported excess of revenues over expenditures for all years."
The comptroller's office issued three notes in response to Wood's comments. The first stated, "Nominal increases to the already excessive budget appropriations will not reduce the amount of excess budgetary appropriations in the future, but instead cause even larger operating surpluses and excessive fund balance." The second said while the shared services programs reduced costs, the district did not reduce budget appropriations to reflect this change.
"Instead, district officials made small reductions totaling $134,561 for transportation services and health insurance appropriations for the 2013-14 and 2014-15 fiscal years, even though actual costs were almost $1 million less during our audit period," according to the audit. "Finally, district officials increased the already overestimated appropriations for these costs during the 2015-16 fiscal year and in the 2016-17 budget as well."
The third note said maintaining the current tax levy, while appropriations are still overestimated, will not reduce the district's excessive fund balance in the future.