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Overcast District 12 addresses state audit concerns
Following report, administrators work to improve operations
After reviewing the results of a recent school audit by state Comptroller Thomas DiNapoli’s office, administrators in the Malverne School District say they have already taken steps to improve the district’s financial operations.
The audit, which examined District 12’s internal controls over financial activities from July 1, 2007 to April 30, 2009, recommended several ways that administrators can manage the district more effectively. In some areas, such as fund balances, the audit extended back to July 1, 2005. It was released on Dec. 15.
Excess funds
The audit report revealed that the district has an overfunded employee benefit accrued liability reserve, also known as the EBALR, which administrators use to pay employees for accrued leave time and benefits due when they leave the district. As of June 30, 2008, state officials said, the district had an EBALR balance of over $2.3 million, roughly $1.1 million more than what the state deemed a “reasonable limit.”
Dr. James Hunderfund, the district’s superintendent, said that administrators made an effort last year to reduce the reserve by establishing a $5 million capital reserve fund. That fund, which will be used to pay for repairs, upgrades and refurbishments of district buildings and facilities, was approved by voters in last May’s school budget vote. Hunderfund said the surplus $1.1 million had been transferred to the capital fund.
The state’s report also noted that District 12 has too much money in its unreserved fund balance, which the district taps to pay for, among other things, unexpected expenditures. As of June 30, 2008, the audit stated, the unreserved fund balance was over $2.3 million, or 5.47 percent of the district’s $43.5 million budget appropriations for the 2008-09 fiscal year. Districts are legally allowed surpluses of no more than 4 percent.
Auditors said that district officials were aware that the fund had too large of a balance and had told the state that they are looking to use a portion of it to pay for retirees’ other post-employment benefits costs. State authorities said, however, that reserving portions of this fund for that purpose is not permitted by law.
