State says Malverne ‘susceptible to financial stress’

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In a report released by New York state Comptroller Thomas DiNapoli last week, Malverne was listed among 22 villages that are experiencing some level of financial stress, but village officials say the report incorrectly evaluates the village’s fiscal state.

The report, generated by DiNapoli’s Fiscal Stress Monitoring System, evaluated 539 villages across the state, and described Malverne as “susceptible to financial stress” — the lowest stress alert level on the report other than “none.”

One of the main reasons Malverne appeared on the list is the village’s fund balance. “We consider fund balance to be the best measurement of a municipality’s health, and it is at an unhealthy level for Malverne,” Brian Butry, a spokesman for DiNapoli, told the Herald. “It’s obviously something village officials are going to want to monitor.”

The report noted the village had an operating deficit of $668,000 last year, yet still held a fund balance of almost $500,000. Mayor Patti McDonald said that if the village had used the fund balance to offset the deficit, its financial situation would have appeared worse on the state report.

The state report bases 50 percent of its stress evaluation on fund balance, and if a village’s fund balance falls below 10 percent of its gross expenditures, it accumulates points toward an evaluation of poor fiscal health. Since Malverne’s fund balance fell below 3.3 percent of gross expenditures for assigned and unassigned funds last year — to 3.1 percent — it was given the maximum 3 points. Last year Malverne had gross expenditures of just under $15.5 million and was left with a fund balance of just under $487,000.

Village officials offered several reasons for the “susceptible” rating, including the village’s desire to avoid raising taxes and a one-time settlement to New York American Water Company of $800,000 due to litigation over the assessment of water pipes. The company was originally seeking $1.6 million from the village.

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