By Andrew Hackmack
Representatives of the firms that conduct internal and external audits for the district presented their findings at the Oct. 27 Board of Education meeting. Assistant Superintendent for Business Ed Cullen said many of the recommendations from prior years' audits have been implemented to strengthen financial controls in the district.
The external audit reviews the district's financial statements, which are prepared by an accounting firm with the assistance of the business office staff. Cullen said that the review begins late in the school year and continues through the summer. The auditing firm presented its findings to the district's audit committee, which is made up of members of the Board of Education, and then to the public.
Alan Hu, of Coughlin, Foundotos, Cullen and Danowski, presented the external audit's findings. He gave the district a "clean opinion," which is the highest rating. "Overall, the district is in very good fiscal condition," Hu said.
The internal audit reviews the operations of the school district. Auditors visit the district at least once a month to do an overall risk assessment of the district's financial controls. Cullen said that during the past year, the auditors focused on payroll and accounts payable. Those findings were also presented to the audit committee, and then to the public.
Ernie Smith, of Narocki Smith, which conducted the internal audit, also gave a favorable opinion of the financial management in District 30. "You have excellent controls here in your school district," Smith told the public at the meeting.
Board of Education President Ken Cummings said he was pleased with the findings of the two audits. "It shows that there are controls in place," he said. "It was a good audit. We should be very proud of that."
The public will be given a report by the district's claims auditors at the Nov. 24 meeting. Claims auditors review all payments and purchase orders.
Cullen explained that the auditing firms work for the Board of Education, not district administrators. He said the business office opens its doors to the auditors. "We're very cooperative," Cullen said. "It's my opinion that we do a fine job."
Excess in reserve account
State education law allows a district to keep up to 4 percent of its budget in an unreserved account. The recent audit showed that District 30 finished the 2007-08 school year with a fund balance of just over $1.3 million, which is 4.54 percent of the current year's budget, an excess of $158,000.
Cullen said that the extra funds are the result of the district's getting more state aid last year than officials had anticipated. "State aid is always a question," he said. "And now it's even more of a question with the fiscal condition of the state."
Cummings noted that although the district does have some excess funds, he is not going to gripe about getting extra state aid. "This is a very good thing to have happen," he said. "If it was the other way around, we would be looking for $100,000."
Cummings said there are a number of ways to eliminate the fund balance overage and bring the district into compliance with state guidelines. However, he noted, it is too soon to speculate. "A lot will be dependent on what Albany does with state aid," he said.
Cummings explained that budgets are based on estimates. Often, district officials do not know how much aid to expect when preparing a budget.
Cullen and Superintendent Dr. Elaine Kanas detailed some of the ways the surplus can be reduced. The district maintains a capital reserve fund and, as it did in May, it could seek voter approval to move money into the fund and finance future building repairs. Another option is the workers' compensation reserve, which is not funded to its limit. Or the money could be used to offset a future tax levy increase. "It could be used towards next year's budget," Kanas said. "There are many options the board needs to look at."
Kanas noted that in the past few years, the state has increased the fund balance limit from 2 percent to 4 percent. "They know that everybody needs money in the bank for emergencies and to take care of fluctuations in state aid," she said. "If we have no money in the bank and something happens, then we have to use credit."
When the district borrows money, Kanas explained, that increases the amount of interest it has to pay, which in turn increases the burden on taxpayers. She said it is good practice for districts to keep a healthy reserve, but she added that district officials will work to comply with the state's limit by the next budget cycle.
Gov. David Paterson has called state legislators into a special session on Tuesday to address the current $1.5 billion budget shortfall. Some fear that lawmakers could make a mid-year cut to state aid. If so, that might make the district's options for the excess funds moot, because the money would likely be needed just to get through this year.
Comments about this story? AHackmack@liherald.com or (516) 569-4000 ext. 265.
