Comptroller: District 24 under financial stress

Spending of reserve funds has put Valley Stream District 24 on a new fiscal stress monitoring list released last week by New York State Comptroller Thomas DiNapoli.

Calling it an “early warning system,” Brian Butry, a spokesman for DiNapoli, explained why this evaluation of New York’s 674 school districts was conducted. “Comptroller DiNapoli has visited and discussed fiscal stress in communities throughout the state that are facing financial challenges,” Butry said, “in order to address the specific problems that local governments have.”

District 24 was placed on the “moderate stress” list, along with 22 other districts from around the state. School officials say that despite its inclusion on the list, the district is in good financial shape.

“It’s an advisory,” Superintendent Dr. Edward Fale said. “It’s a warning. It’s a signal to you to monitor your expenses versus revenue.”

According to Fale, there are two reasons why the district was included on the list. It has used a significant portion of its savings to offset tax increases over the past few years, and it ran out of fund balance last summer because an expense was paid from the wrong account.

A 2009 audit by DiNapoli found that District 24 had too much money in its fund balance. Legally, a district can have up to 4 percent of its budget in its undesignated reserve accounts, but District 24 had three times that. Since then, school officials have been working to comply with the regulation by applying the excess funds to subsequent budgets.

For example, the district used $2.6 million from its reserves to fund this year’s $28.7 million budget. Fale said that because the district has been using large amounts of reserves over the past few years, it looks like it is spending far more money than it is earning, which has a negative impact on its financial outlook.

“As you use your reserves,” Fale said, “your fiscal health and wealth of the district goes down, so naturally you’ll be projected to have stress.”

Using surplus funds to help fund a budget is a common practice among school districts, and is done to keep tax increases as low as possible. It is known as “giving money back” to the taxpayers. “I think we gave back too much,” Fale said.