After criticism from the Mineola Board of Education, the state comptroller’s office defended an audit that found that the district had mismanaged its finances by amassing excessive surplus funds.
State Deputy Comptroller Elliott Auerbach wrote to Mineola School Superintendent Michael Nagler that despite the district’s criticism, it did not challenge the figures in the audit, released in September.
After the audit was made public, the Mineola school board defended its practices and called the audit “pedantic and myopic.”
Auerbach said that the state comptroller’s office has routinely audited the over 800 public school districts in New York periodically following the Roslyn school district scandal. In 2006, Frank Tassone, the former Roslyn school superintendent, was sentenced to 4 to 12 years in prison for embezzling $11.2 million from the school district.
In the Mineola audit, which covered the period from July 1, 2016, to June 30, 2020, state Comptroller Thomas DiNapoli’s office found that the district had surpluses totaling $20.7 million.
The maximum surplus allowed is 4 percent, but the Mineola school district’s surplus, or appropriated fund balance, reached 13 percent, according to the audit.
Auerbach wrote, “State law limits the amount of unassigned fund balance, essentially funds remaining at the end of a fiscal year, that a district can maintain. An excess fund balance directly impacts the tax burden borne by the district’s taxpayers.”
In its earlier rebuttal, the Mineola school board said that the district must deal with uncertainty about the amount of aid it will receive from Albany when making budgets. It said the surplus funds had been used on capital projects in the following year. And it said it was able to secure a Moody’s Aa3 (Prime-1) bond rating to refinance bonds.
The board also said that each budget is transparent and is approved by the voters. The board also said state auditors were unaware of advantages a surplus can bring, such as funding projects, and instead cited it as mismanagement.
In his letter, Auerbach said: “The board does not challenge the figures utilized by our office or the dictates of state law, either in its response (which was published with the audit report) or in its recent letter, or that the district’s tax levy likely would have gone down if appropriate estimates were utilized and the statutory limit was observed. Rather the board merely states that no monies were misappropriated – a claim not made in the report – and that school districts must follow different rules than towns and villages.”
The deputy comptroller described the surplus as a tax burden, saying, “This examination revealed a pattern of over-budgeting with excesses totaling over $20 million. Further, objective reviews revealed nearly $13 million of taxpayer-funded dollars was appropriated to finance operations over the four years that was not needed.”
In a statement to Blank Slate Media, Nagler said the district does not dispute the audit’s accuracy or content. But he again cited the benefits the surplus funds brought to the district, including capital improvements, reinvestment and full-day prekindergarten.
He wrote in the statement: “We have built two new turf fields, new libraries, fine arts facilities, cafeterias, bus loops, windows, doors, roofs, air conditioning in all classrooms (in all buildings) and enhanced building security, all of which was paid for without bonds or borrowing money. The report doesn’t mention we closed two schools and that is the genesis of our ability to reinvest those savings back into our school system … Lastly, there is no mention that our average tax levy increase for the last ten years is 1.32 percent. We believe that track record is an exemplar of managing monies, avoiding spikes in the unpredictability of the tax levy and maintaining exceptional facilities.”
At a Board of Education meeting last Thursday, a district auditor said when districts exceed the 4 percent maximum surplus, it is usually due to one-time unanticipated revenue boosts, which the district incurred a few years ago.
Earlier this year, the district completed a five-year capital plan that incorporated renovations across the district. On Tuesday, taxpayers will vote to decide whether it should purchase a property near the high school for $4.25 million and expand the campus.
The site, the current home of Sperry Associates Federal Credit Union, sits adjacent to the existing high school on an 1.5-acre property and its acquisition would come at no additional cost to taxpayers, the district said. Money from the district’s surplus would be used to finance the purchase.