Audit scolds Niskayuna school district for draining surplus
NISKAYUNA Auditors have cautioned Niskayuna school officials against using too much of the district’s surplus to balance its budget.
Jim Amell of Marvin and Company told the Board of Education last week that it was a “clean audit” with no improprieties found. However, the district has drained its surplus and has long-term liabilities.
The district’s “unrestricted fund balance” — which can be used for any purpose — had only $17,660 in it as of June 30.
The auditor wrote that “over the past three years, the district has utilized reserves in an effort to close the gap between revenues and expenditures and to minimize reductions to educational programs.”
The report went on to say that this will not be an option for future budgets.
The district’s expenses were under-budget by about $915,000, according to the audit. However, total expenses exceeded revenues by about $265,000. This created a shortfall, which was made up with more surplus funds.
Amell said Niskayuna’s largest liability is its long-term debt, which stands at $118 million. The largest share of this is $87.5 million in outstanding bonds that included the project to renovate all of the district’s schools.
State law says school districts’ total debt cannot exceed 10 percent of the assessed property value within the district.
Niskayuna is currently at 3.24 percent.
In September, Moody’s Investors Service downgraded the Niskayuna Central School District’s bond rating one notch from the third-highest rating of Aa2 to the fourth-highest mark of Aa3 because of its high debt levels and low reserves.
Other liabilities are $28 million in future retiree benefits. Just like other school districts, Niskayuna faces long-term liabilities in paying for retiree health care and pensions. In 2011-2012, the cost of health insurance for its roughly 800 active employees was nearly $6 million, compared with roughly $2.2 million for its 334 retirees.
Total net assets of the district decreased by $4.6 million, which can be attributed to that liability, according to Amell.
Board member Jeanne Sosnow asked if there were any prospects for relief from that liability and assistance from the state.
Amell said school districts can expect to remain on the hook for those expenses, as the governor is telling school districts to tap their surpluses. “I don’t see any political willingness to allow funding of the liability,” he said.