Lowville- An audit by State Comptroller Thomas DiNapoli's office released today was critical of the amount of the unreserved fund balance the district currently has on hand. The Payment in Lieu of Taxes (PILOT) agreement with the wind farm within the district has resulted in a large amount of added revenue, which the audit states isn't being managed properly by the district. A fund balance represents resources remaining from prior fiscal years that can be used to provide a cushion for unexpected events, assist with cash flow needs or lower property taxes for the ensuing fiscal year. The estimation of fund balance is an integral part of the budget process. A district may retain a portion of fund balance within the limits (up to 4 percent of the ensuing fiscal year’s budget) established by New York State Real Property Tax Law (RPTL). Fund balance in excess of that amount must be used to fund a portion of the next year’s appropriations, thereby reducing the tax levy, or to fund legally established reserves. Generally, school districts are not limited as to how much money can be held in reserves; however, reserve balances should be reasonable. According to the audit The Board of Education and District offiials did not manage fund balance in accordance with statute. Over the last four years, District officials budgeted to use approximately $7.35 million of fund balance to finance District operations. However, primarily because of unrealistic appropriation estimates (overestimating expenditures), they did not use any of the appropriated fund balance during this period. The audit states that the District’s unassigned fund balance more than doubled from $5.3 million at the end of 2010-11 to $10.8 million at the end of 2013-14 year. The unassigned fund balance as a percentage of the next year’s budgeted appropriations increased from 21 percent in 2010-11 to 42.6 percent in 2013-14 which is nearly $9.8 million over the 4 percent limit allowed by RPTL. Also revealed in the audit was the fact that although the District first received the wind power PILOT agreement revenues in 2006-07, District officials used very litte of this new revenue source to help lower property taxes over the past nine years. The following tables provided in the audit show the amount of fund balance, the amount of overestimated budgeting, and the property tax levy vs wind farm PILOT payments over the audit period. |
| State Comptroller Audit of Lowville Academy Reveals District Has Too Much Money on Hand 12/01/15 04:30pm |
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Recommendations from Audit Report:
Response From Lowville Academy & Central School:
