5-year report: Schools had millions in reserves, missed cost savings

ALBANY — A report released Tuesday by state Comptroller Thomas DiNapoli found that money “unnecessarily” placed in reserves, missed opportunities to save money and questionable payments by school districts across New York totaled $880 million over five years.

Auditors found that 285 districts and boards of cooperative educational services improperly kept a total of $615 million in various reserve accounts, meaning the funds exceeded reasonable estimates of anticipated liabilities, DiNapoli said. Essentially, the money is “stranded” in these accounts, he said.

Most of the money was placed in special reserves to pay for accrued sick leave and leave when employees exit their jobs, the audit said.

“You shouldn’t be squirreling away money at a time when there’s so much pressure on taxpayers, and at the same time raising taxes,” DiNapoli said.

In some districts, there are reserves allocated for future retiree health-care costs, but there is no authorization in New York to set up these kinds of accounts, the comptroller said.

DiNapoli is proposing legislation to permit school districts to set aside reserves to pay for Teachers’ Retirement System costs and set aside money to pay for future retiree health-care costs.

DiNapoli is also seeking legislation to increase transparency and accountability in district finances, help them with long-term financing and give taxpayers access to more information on how money is spent. School boards would have to authorize increases in funding reserves, and school districts could create tax stabilization funds to help keep tax increases under 2.5 percent of the tax levy.

The Comptroller’s Office performed 733 audits of all the state’s public schools and boards of cooperative educational services between August 2005 and last week, more than a month ahead of the statutory deadline.

Over the five years, auditors identified potential fraud totaling about $18 million in 19 school districts, including Poughkeepsie, Mamaroneck and Valhalla.

Source: Poughkeepsie Journal

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