Fiscal challenges for W.H. schools?

A financial audit conducted by New York State Comptroller Tom DiNapoli reported last week that the West Hempstead school district may be heading towards fiscal challenges.

The state audit, conducted periodically in all school districts in the state, focused on the time period between July 1, 2012 through June 30, 2016. The West Hempstead school district operates five schools with approximately 2,120 students and 420 employees.

According to the report, district officials have effectively managed the district’s financial condition. However, the decline in its unrestricted fund balance and reserve balances by $667,600 and $2.1 million, respectively, over the past three years suggest potential problems down the road.

District revenues, the audit reported, have not kept pace with its expenditures, which have increased at rates of 4 and 8 percent respectively.

One of the reasons for the decrease in revenue was due to a decline in the district’s operationg revenue from the Island Park school district, which sends its public high school students to schools in either West Hempstead or Long Beach. That revenue has declined steadily in recent years, the report said, because more students have chosen to attend Long Beach High School. The West Hempstead school district’s agreement with Island Park expires in June 2018 and, the report said, district officials reported that negotiations have not yet begun with them on a contract renewal.

As a result of the revenue and expenditure trends, and the continued use of fund balance, the District’s total year-end fund balance declined by over $2.4 million, or 30 percent over the last three years.

The report recommended that the school district continue to develop multiyear long-term financial plans, including projecting funding levels and use of reserve funds and update these plans periodically. A recommendation was also made to explore and pursue opportunities to reduce expenditures or raise additional revenues to avoid over-reliance on the fund balance.

In a June 15 letter responding to the comptroller’s audit, former West Hempstead Superintendent John Hogan said, “Unfortunately, the constraints of the tax cap, coupled with challenges created by the Gap Elimination Adjustment and a shrinking material revenue stream lead the district, in the short-term, to increase its utilization of fund balance and reserves as a funding mechanism. This was not done in haste or without considerable deliberation, but in an effort to balance the programmatic needs of the students with the financial reality.”

Hogan also said that with the GEA behind the district, and a more stable revenue on the horizon, the board already took corrective action in the 2016-17 budget and reduced the utilization of the fund balance by 57 percent.