A state audit of the Batavia City School District found that through apparent accounting errors, some employees have been overpaid and the district has tended to over estimate expenses and under estimate revenue, resulting in an operating surplus of $6 million.
"As a result, we identified $7.3 million which has been inappropriately placed in reserves but rather should be used to benefit taxpayers," the audit report states. "Had these practices not occurred, and had District officials complied with statutory limitations for retained fund balance, the excess could have been used for District operations, or to fund necessary reserves or to reduce the tax levy."
The district plans to take corrective action, according to both the report and a press release from the district.
Those were the only two nicks on the report, which district officials otherwise characterized as favorable audit.
"The audit report delivered to the Board of Education was very positive. No graft, corruption, or misappropriation of public funds was identified," district officials said in a press release.
Our audit compares very favorably to other school district audits across the state. Other districts have been cited for administrative actions without Board approval, weaknesses in internal controls and purchasing, District actions without voter approval. We have not been cited for any of these issues. This audit reflects the hard work that has been done in our District to ensure that the public can trust that the District officials and Board of Education take their fiduciary responsibility very seriously.
The payroll errors, as uncovered by The Division of Local Government and School Accountability of the Office of the State Comptroller of New York, amounted to $50,000 in "improper or unsupported payments."
Auditors reviewed payroll records for 17 employees, and reported, "Ten employees, or 59 percent, were overpaid or received compensation which was not provided for in the applicable contracts or supported by sufficient documentation."
The district's press release:
The Comptroller’s report highlights several payroll findings, which appear to be overstated when the specific findings were investigated by District staff. The actual legitimate findings amount to less than one tenth of one percent of the total payroll processed over the two year period. There is always room for improvement and we are planning to take several steps to reduce any potential risk for error.
As for the surplus funds, the district says:
The essence of this comes down to the simple fact that the District budgets conservatively, never overestimating its potential revenues or underestimating its potential expenses. This practice allows for flexibility should an unforeseen financial hardship arise, but often results in legitimate surplus. The District has used this surplus to maintain a stable tax levy and to fund authorized reserves. Even though the Comptroller’s Report views this negatively, there appears to be an inherent contradiction since these accounts are promoted as providing many benefits to municipalities and their citizens (www.osc.state.ny.us/localgov/pubs/lgmg/reserves.pdf). No doubt conservative budgeting practices have allowed us to position ourselves to maintain our educational program even in difficult financial times without turning to tax increases.
Download: Full Audit Report (PDF)
