By Mike Schnitzel
The board and district auditor Vincent Cullen of Coughlin, Foundotos, Cullen, and Danowski, LLP, of Port Jefferson Station explained that the district had capitalized $8.3 million to date, $3.3 million over the amount voters approved when they passed the capital reserve fund in May 2001. Cullen said that his office was in error when they informed the Lynbrook Board of Education, last summer, that their funding limit for the capital reserve fund was $10 million. According to Cullen, the error was caused when the figure for the limit was taken from a proposal, not the actual resolution that was put to the voters. Cullen said the procedure that caused the error was changed by his firm and that "the important thing here is once this was discovered it was addressed in a forthright manner."
In response to concern from residents, and upon the recommendation of Cullen and the district's legal counsel, Board President Phyllis Caruso announced that the excess funds would be put back into the general fund's unappropriated fund balance until a new proposition for a capital reserve fund can be put before the voters. She said that the excess funds remain "whole, in-tact, and untouched at this time."
Cullen said that he checked with the New York State Education Department and they told him that was the appropriate course of action. He said that there were, in fact, two options for the $3.3 million of excess funding. The money could go into a new capital reserve fund that would be used to continue funding capital projects within the district if it is passed by the voters. Should the proposal for the continuation of the capital reserve fund is rejected by the voters, the $3.3 million would be used to reduce the tax levy for the 2006-07 school budget. The school board is already planning to use a $1.7 million budget surplus to help offset the coming year's tax levy.
According to Caruso and Assistant Superintendent for Business, Melissa Burak, giving back more than the $1.7 million planned would cause a spike in the tax levy for the 2007-08 school year.
"Over the past five years we have strategically gone from $2.2 million to $1.7 million [in money to offset the tax levy] because we know the impact it will have on the tax rate," said Burak.
Cullen said that the budget surplus has shrank over the last several years as the result of discussions between him and the board regarding how much contingency money needs to be put in the budget. "To have a sound budget, you need to build in [funds for] contingencies because things unexpectedly happen," said Cullen.
Lynbrook businessman Jeffrey Greenfield said he came to the meeting after reading about the board's confusion over the capital reserve fund. He said that he, too, was confused but after hearing explanations from the board and Cullen, he was happy that the district was a few million over the fund limit rather than short the money.
"This shouldn't happen in today's world," said Greenfield, who proposed the board return the $3.3 million to the taxpayers and, in addition, take a year to consider their options.
"Give everybody a little relief, ease up that way, and put the money back into the current fund balance and reevaluate it" he said.
Caruso replied that the board was concerned that "excess monies collected cannot be used in the way we planned to use them," if the capital reserve fund is terminated.
Greenfield implored the board to get an opinion from another auditor, saying that he wasn't comfortable with the auditor who made the mistake advising the board on how to correct it. Greenfield also suggested that the district switch auditors on a regular basis. Cullen has been the district's auditor for the past five years, and his firm collected $41,000 as their auditing fee this year, alone.
Tom Lynch, president of the Lynbrook Community Coalition, said, in his opinion, the problem with the capital reserve fund actually developed in 2004, when the board originally exceeded their $5 million limit, but the error went undetected. He said that although the error was made, he was happy it could be corrected, calling it "an administration error." This is no Roslyn," said Lynch, referring to the school district
Former school board member Bill Lyons said that he hoped the board would not consider another bond in place of the capital reserve fund, calling the 1997 district bond "planned obsolescence."
"I don't think a bond is a scenario we would want to do," said Lyons.
Caruso reiterated the board's intention to follow the advice of their accountants and attorneys to draft a resolution to ask for an extension of the current capital reserve fund, which expires in June.
Comments about this story? Mschnitzel@liherald.com or (516)569-4000 ext. 265.
