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The West Valley Central School District, plagued by operating deficits a decade ago, now is being faulted for having too much money.

An audit by State Comptroller Thomas P. DiNapoli’s office covering a four-year period ending last June took the School Board to task for overestimating how much it needed to spend by about $1 million a year and sticking the surplus into various reserve funds.

At the same time, auditors noted, the district increased its tax levy every year, from $2.8 million in 2009-10 to $3.2 million in 2012-13, plus an additional 2 percent hike for 2013-14.

The reserves held more than $2.1 million as of last June 30, auditors said, and contended that no more than $1.7 million was needed for expenses such as debt service and workers’ compensation. They noted that items intended to be covered by the reserve funds have been paid instead out of general funds from the annual school budget.

“By routinely using these practices, district officials have withheld significant funds from productive use, levied unnecessarily high taxes and compromised the transparency of district finances to taxpayers,” the audit declared.

In response, School Superintendent Eric J. Lawton and School Board President Michael Frascella began by recalling how using reserve funds to reduce the tax levy was what got the district into financial trouble in the early 2000s. Doing this again, they said, “would put the district in severe fiscal stress.”

The school officials said that because of the presence of the West Valley Demonstration Project, “the ability to grow the district’s tax base is limited due to the stigma attached to a community that houses high-level nuclear waste.” The PILOT payment by the state for the facility has stayed the same since 1997, they noted.

They added that the district enjoys a credit rating of A+ from Standard & Poor’s and low borrowing rates, thanks to “conservative budgeting practices, with consistently positive financial performances and maintenance of strong reserve levels.”

As for overestimating expenditures, they said that changes in costs for electricity, natural gas and fuel, along with special education costs, retirements and new hirings, make those expenses hard to predict.

They noted, “We have maintained our actual expenditures at levels that are essentially flat. The district has accomplished this during a time where costs for retirement and health insurance have increased significantly.”

The school officials also indicated that they are fulfilling the audit’s recommendations. On some points, such as making realistic budget estimates and including the use of reserves in budget documents, they declared that they already do that.

They noted, however, that they have drafted a plan to review all of the reserve funds and establish rules for meeting statutory requirements on the funds. They promised that they will finalize it during the coming year.

As for an unassigned fund balance, the officials said they hope to use it to pay the local share of a small capital project, which includes repairing a roof and other infrastructure improvements. They added that they plan to hold a referendum in February to ask taxpayers to approve a fund transfer for the project and to create a capital reserve fund for future projects.

email: danderson@buffnews.com