State says school budget is overfunded

District responds with corrective steps

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A state audit of the Malverne school district reported that, while district officials effectively managed the district’s fund balance, including reserves, the district adopted overly conservative budgets that were overfunded.

The state’s fiscal audit is conducted periodically by Comptroller Tom DiNapoli’s office in all New York State school districts, and examined the Malverne school district’s budget from July 1, 2014 to March 1, 2016. The district operates four schools with approximately 1,700 students and 400 employees, and has budgeted $53.5 million in the 2015-16 school year.

Dr. James Hunderfund, superintendent of the Malverne school district said that the district accepts the comptroller’s audit, and steps have already been taken to cut down overfunding. “Most recently, the board took action through a resolution to move funds out of unemployment reserve board – that was one of the comptroller’s recommendations,” said Hunderfund. “Eight-hundred fifty thousand dollars was taken out that budget, which was approved at the July 5th board meeting. Seven-hundred fifty thousand of it went into the capital reserve fund — that was already established by the board — and the other $100,000 went to the employee benefit accrual liability reserve,” he said. The district had $881,000 in its unemployment insurance reserve.

According to the report, from 2012-13 through 2014-15, District experienced cumulative surpluses totaling $1.5 million. The report also found that certain expenditures, such as health insurance and out-of-District tuition costs, were consistently overestimated.

“The question is what to put in your budget in order to cover what you project in your crystal ball to be your expenses,” said Hunderfund. “When you’re dealing with $55 million per year, it is not an outrageous amount to be off,” he added when asked about the district’s unrestricted fund balance, which exceeded the statutory limit for 2012-13, 2013-14 and 2014-15 by 3.9, 2.7 and 2.0 percentage points,3 respectively.

The state report recommend that the district continue to closely monitor its unrestricted fund balance to ensure it complies with the statutory limit, continue to adopt budgets with more realistic expenditure estimates, and review the unemployment insurance reserve balance and transfer excess funds to fund balance, where allowed by law.

“Doing all three of these consistently may result in unnecessary increases in real property taxes,” the report said.