New York State Comptroller Thomas DiNapoli
(Photo by Jgosc/CC BY-SA 4.0)
Long Island Press archives
A recent report by the Rockefeller Institute of Government on Foundation Aid said in 2022-2023 that nearly one-third of all school district’s fund balance limits were over the 4 percent threshold mandated by state law.
A Newsday review found more than 80 statewide school districts that have been flagged in recent years for stockpiling cash reserves deemed unnecessary or even exceeding the state’s statutory limit.
Eight districts in Suffolk County; Bayport-Blue Point, Connetquot, East Islip, East Moriches, Oysterponds, Shelter Island, Southampton, and West Islip were also flagged as having fund balance limits greater than the legally mandated amount.
In Nassau County four districts–Freeport, Merrick, Long Beach, and Mineola–were flagged as having fund balance limits greater than 4%.
The Freeport School District enrolls roughly 6,200 students. An audit by the Office of the State Comptroller found that the board and district officials did not properly manage fund balance and reserves.
The report found that they consistently and significantly overestimated appropriations. The audit added that it appeared the district needed to use appropriated fund balance and reserves to close projected budget gaps totaling $51.4 million for fiscal years 2019-20 through 2022-23. However, none of the appropriated fund balances or reserves were used.
In addition, the Office of the State Comptroller flagged the district for similar practices in December 2016.
“We appreciate the Rockefeller Institute’s report and support the suggestion to allow districts to maintain up to 10% in unassigned fund balance,” Fia Davis superintendent of schools in Freeport said in a statement to Schneps Media Long Island.
“As stated in my response to the comptroller, the current 4% limit is detrimental to our ability to properly save as a high-needs district. We look forward to continuing to offer a high-quality educational experience for our students.” she added.
The Merrick School District was also flagged by the comptroller’s office as the audit said that board and district officials did not properly manage fund balance and reserves.
The audit mentions that while they were able to reduce the surplus fund balance from 19 percent from June 2015 to 8 percent as of June 30, 2023, the audit found that they consistently appropriated fund balance that was not needed and overfunded reserves, primarily through transfers of surplus fund balance.
In the Long Beach School District, auditors reported a surplus fund balance that exceeded the statutory 4 percent limit in three of the four years reviewed by as much as 5 percentage points.
Auditors also found that while real property tax levies remained the same from 2020-21, the district’s budgeting practices resulted in tax levies being higher than necessary.
There has not been an audit of the Mineola Union Free School District in 2024. The most recent comptroller report was done in 2021.
The 2021 report found that over the four-year audit period, the board consistently appropriated fund balance totaling $12.9 million that was not needed. When the unused appropriated fund balance is added back, on June 30, 2020, the unassigned fund balance increased to approximately 13 percent or about nine percentage points above the 4 percent legal limit.
Efforts to elicit comment from the Merrick, Long Beach, and Mineola school districts were unsuccessful.
As a result of the Campaign for Fiscal Equity v The State of New York lawsuit and the subsequent Education and Budget Reform Act of 2007, the state made a promise to increase funding for its schools.
That funding is called Foundation Aid. How much each district got was determined by a complicated formula. One element of that formula called the inflationary index had been based on the one-year change to Consumer Price Index.
In 2023-24, Gov. Kathy Hochul and the New York State Legislature enacted a budget that fully funded the formula for the first time since its inception.
With the policy fully funded, the enacted 2024-25 state budget called for the public policy research arm of the State University of New York to conduct a study to assess the formula and share recommendations for modernizing and improving it.
A little more than seven months after that mandate was issued, the Rockefeller Institute of Government produced a 314-page report comprehensively examining the Foundation Aid formula and its components and presenting to policymakers a menu of options to update it.