SINCLAIRVILLE — New York State Comptroller Thomas P. DiNapoli released audits this week for five school districts in the state, one of which was Cassadaga Valley Central School. The local school was cited for financial management, as “district officials did not properly manage fund balance and need to improve their budgeting practices,” according to DiNapoli.

The state Comptroller’s Office conducts audits at all school districts every five years, and CVCS’ audit period was July 1, 2014 to May 22, 2018.

“In an era of limited resources and increased accountability, it’s critical that schools make every dollar count,” DiNapoli said via statement. “By auditing school district and charter school finances and operations, my office continues to provide taxpayers the assurance that their money is being spent appropriately and effectively.”

This is the first state audit conducted since Chuck Leichner became superintendent in 2014, and he looks at the process as a positive opportunity for the district.

“We use audit findings to improve program performance and operations, reduce costs and contribute to public accountability,” Leichner explained during a telephone interview Thursday. “In addition to the comptroller’s audit, CVCS engages in an independent external audit on an annual basis as well.”

DiNapoli’s office identified multiple areas where the district could improve their budget management practices. The audit revealed three key findings:

¯ Budget appropriations were overestimated by $3.2 million over a three-year period.

¯ Unrestricted fund balance exceeded the statutory limit by more than $950,000 or five percentage points, as of June 30, 2017.

¯ Three reserves totaling $3 million were overfunded. In terms of the 2018-19 budget, there is a 5.5 percent increase in appropriations from last school year and the property tax levy is 2.5 percent higher that in 2017-18. According to the audit report, “Given these projections and fund balance levels, the board has continued to levy more taxes than necessary to sustain operations and may have missed opportunities to better use fund balance and reduce taxes.”

In addition to recommending a comprehensive multiyear financial plan, auditors made the following recommendations:

¯ Adopt budgets that include reasonable estimates for appropriations and use of appropriated fund balance.

¯ Reduce the unrestricted fund balance to within the statutory limit and use excess funds to fund one-time expenditures and needed reserves or reduce property taxes.

¯ Adopt a more comprehensive reserve policy and review reserves to determine whether the balances are necessary and reasonable.

On behalf of the board of education, William Carlson, board president, submitted the district’s written response to the audit. The district generally agreed with the findings and suggested improvements of the audit while acknowledging the obstacles in creating an annual budget.

“School districts face significant challenges with the uncertainty of school aid, continued unfunded mandates, and increases in employee benefits costs,” Carlson explained.

Leichner echoed these challenges, and added the unpredictability of “insurance, utility costs, special education and expenses connected with an increase in homeless students which are beyond our control. … It is difficult to anticipate what our actual expenses may be based on those high cost items, which can vary significantly from year to year.”

Audit citations for financial management are not uncommon for area school districts. Earlier this year, the Fredonia Central School District and Westfield Academy and Central School District were also cited for financial management for excessive unrestricted fund balances. In 2017, the Dunkirk City School District and Gowanda Central School District were cited for financial management for similar reasons.

It appears that the district is already taking steps to adopt a more comprehensive reserve policy. In July the board formally approved the new reserve plan, which will help the district “to effectively establish, fund and allocate reserves in a matter consistent with finest fund balance practices.” Leichner explained that this spring, when the budget for 2019-20 is proposed, the district plans to implement a long-term plan for the use of the reserve funds, which will be a key part of annual budgeting next year and in the future.