By Andrew Hackmack
District officials say they accepted the audit's findings and moved to correct the problems even before the audit was made public last week.
The comptroller's office found that the High School District ended the 2004-05 school year with a fund balance of $3.7 million more than allowed by the state. According to the audit, the district finished the 2005-06 school year with $3.7 million more than allowed, and finished the 2006-07 school year with a total excess of $3.5 million.
During the first two years of the overage, the state capped districts' fund balances at 2 percent of their total budgets, and increased the cap to 3 percent in the third year. The cap has since been raised again, to 4 percent. Central High School District Superintendent Dr. Marc Bernstein said that district officials believe they have ended the most recent school year under that figure.
Bernstein said that when the district's external auditors complete their review of the 2007-08 school year, he expects their report to conclude that the district is now in compliance with state law. He said it is likely that the excess fund balance began accumulating in 2002, because district officials budgeted "too conservatively" - overestimating expenses and underestimating revenues.
Board of Education President Jeanne Greco-Jacobs said that a school district is a public business, and needs to have money for a rainy day. No organization, she said, should be in a position where its liabilities outweigh its assets. Still, Greco-Jacobs said, the board accepts that the fund balance was excessive and they have worked to correct it.
District officials said that board trustees learned of the excessive fund balance after an external audit in 2006. They decided to effectively return the money to taxpayers by using it to offset increases in the tax levy in subsequent school years. The tax levy increase was 7.7 percent in 2005-06, but has dropped to 3.61 percent for 2008-09.
Richard Graves, a taxpayer in Valley Stream for the past 14 years, said he was shocked to learn that the district had such a large surplus, and wonders why it was not caught sooner by district officials. "There doesn't seem to be enough checks and balances for the budget and reporting process," Graves said.
He added that he has had no problems in the past with the way the district was run, but now he has plenty of questions. He said he would think twice about whether he would support the school budget next year.
Greco-Jacobs insisted that the board has never tried to hide the fact that district surpluses exceeded state limits. She said that beginning in the 2006-07 school year, the board discussed the issue numerous times in public. "I think we've been very transparent," she said.
Greco-Jacobs added that the board decided to reduce the fund balance over the course of a few years because it would be most fair to taxpayers. If the money had been "given back" all at once, it would have created a greater disparity in the tax levy increase from year to year.
Graves said that while the district may be getting itself back under the threshold, it doesn't necessarily have to hold on to the maximum amount of fund balance. Taxpayers are overburdened enough, he said. "There would be a lot more money they would have to give back at the two percent level," he said.
Findings on purchasing
While the district paid $12 million to 140 vendors in the 2005-06 school year, of all the contracts examined by the comptroller's office, only one was criticized.
The comptroller's office selected only 11 purchase and public works contracts totaling $734,567 (of that $12 million) for review to determine if bids were obtained and the lowest responsible vendor was selected. Only one of those 11 contracts, the one for security services, was determined by the comptroller's office not to have been bid. The comptroller's office report found all other contracts to have gone correctly through the bidding process.
Bernstein said he disagrees with the idea that security services should be subject to competitive bidding. He explained that security services are provided during school days from 4 to 11 p.m., when hundreds of people sometimes use the schools.
Because the security personnel maintain a presence in the school and interact with students, staff and the community, Bernstein said, he believes that the district should have considerable discretion over who it hires. As a professional service, it would go through the RFP process, allowing the district to consider both price and quality. But when an item has to go out to public bid, the district is required by law to award the contract to the lowest responsible bidder.
"This is not just checking that doors are locked and for intruders," Bernstein said. "We have these folk in our schools." He added, however, that because the regulation is a directive of the comptroller, the district is complying, and is now bidding out its security services, resolving the one item of criticism.
The audit recommends that professional services, such as attorneys and engineers, be sought through a competitive process. Bernstein said that the district began a competitive buying process a year and a half ago by sending out requests for proposals (RFPs) for services. He said that the minutes from July's reorganization meeting show that every contract awarded has a reference number to an RFP.
Bernstein explained that the district modified its purchasing practices because district officials noticed that purchasing was a frequent focus of criticism in comptroller audits of other school district. "We changed to meet the expectations," he said.
The audit also found that district officials failed to collect $11,137 from the state in reimbursable special education expenses dating back to the 1999-2000 school year. The district made the payment to a school that provided special education services, after the three-year window to be reimbursed had expired. Bernstein said that was because the school did not bill the Central High School District until 2005. "It was processed and paid because it was a legitimate bill," he said.
In hindsight, Bernstein said, the district should have withheld payment and let the school sue it. The district could then have used the tardiness of the bill, which cost the district a chance to be reimbursed, as a defense.
Greco-Jacobs said that overall, board members were pleased with the outcome of the audit. "There was no finding of wrongdoing, fraud, waste, abuse or weak financial systems," she said. "The two prime areas of concern were similar to those noted for any other suburban school districts."
The district will present the findings of the state comptroller's audit during the Aug. 26 Board of Education meeting. It begins at 8 p.m. at Memorial Junior High School.
Comments about this story? AHackmack@liherald.com or (516) 569-4000 ext. 265.
