OBSERVER Photo by Braden Carmen Fredonia Business Administrator John Forbes previously said this past year’s budget was the toughest budget he has had to put together. Next year’s budget might not be any easier.

No school in all of Western New York had a tougher time getting their budget to pass for this school year than the Fredonia Central School District. Fredonia was the only school in the region — and one of only two dozen statewide — to have its initial budget proposal rejected by voters.

The next budget might not go over well either.

The external audit report for the Fredonia Central School District resulted in a clean, unmodified opinion for the district, the best result a district can have. However, that did not tell the whole story.

Laura Napoli, a Certified Public Accountant at Bahgat & Laurito-Bahgat, presented the findings of the external audit to the district at its latest Board of Education meeting. While Fredonia’s spending procedures did not result in any marks against the district, its finances are not in as strong of shape as many other surrounding districts.

Fredonia technically did the right thing in the eyes of the state in that the district’s unassigned fund balance follows state guidelines. New York State Real Property Tax Law sets a cap on unassigned fund balance of 4% of the most recent year’s budget. However, many districts — and other experts in the field — believe that number is too low, and districts often surpass the 4% cap. In recent years, Gowanda, Forestville, and Silver Creek have all surpassed the cap substantially, and at one point, Fredonia did, as well.

That is not the case anymore. Fredonia’s unassigned fund balance is 2.32% of the succeeding year’s budget. Napoli acknowledged that the figure is low, and urged the district to evaluate ways to increase its fund balances.

In total, as of June 30, the district has $887,915.98 in unassigned fund balance. The district also has $787,558.95 in assigned fund balance, along with $1,623,703.01 in restricted fund balance. Combined, the district’s fund balance totals $3,299,177.94. Of that figure, $750,000 of the $787,558.95 in assigned fund balance is applied to lower the burden on taxpayers. The remaining assigned fund balance is set aside for outstanding payments from the previous year.

Napoli credited Business Administrator John Forbes for how responsible he has been in terms of investing the district’s available funds appropriately. Napoli stated the reason the district has the fund balances it has is thanks to Forbes’ investments.

The office of the State Comptroller previously characterized the district as “susceptible to financial stress” due to its rapidly declining reserve funds. Fredonia’s unassigned fund balance was at approximately 10% of the budget roughly two years ago.

Superintendent Dr. Brad Zilliox stated the external audit report reiterates a lot of what the district was already aware of in terms of its financial situation. He said, “Certainly, this will be part of our planning as we gear up for the budget season, which is pretty much underway at this point already.”

The fact Fredonia’s reserve funds are not healthier is cause for concern, especially considering that Fredonia generated an increase in revenue of 6% in 2025 from the total revenue in 2024. Fredonia generated more than $400,000 more in real property tax revenue in 2025 than the previous year, as well as a dramatic increase in state aid of more than $1.5 million, totaling $17,644,516 in state aid in 2025. The district’s total revenues increased from just over $34 million in 2024 to just shy of $36 million in 2025.

While the district generates close to $36 million, it spends more than it generates. The 2025-26 School Budget totals $38,193,800. That figure includes the $750,000 of the assigned fund balance, as well as the costs associated with the approved portion of the district’s Capital Project.

The district’s total expenditures increased by 6% from 2024 to 2025, from just under $34 million to just over $36 million. The net expenditures in excess of revenues and transfers to other funds in 2025 was $391,195.

After a re-vote once the initial 2025-26 Fredonia School Budget was rejected, voters eventually approved a 1.9% tax increase. The increase covered the cost of Proposition 1 of the Capital Project, with no additional tax increase to cover the other operating costs of the district. Prior to that, a tax increase of 2.59% was rejected. The budget barely passed in a re-vote, with 986 voters in favor of the re-vote budget, compared to 749 votes against.

Even though the voters barely approved the budget last year, Napoli urged the district to ask for as much as it can this time around to put the district in a better position. Responding to Board member Sheila Hahn’s request for suggestions to better the district’s position, Napoli said, “One of the things that we discussed is looking at departments. This is going to be tough. It’s not easy. You have a property tax cap, so you’re limited in what you can raise in property taxes. … You have to look at decreasing expenses.”

Hahn highlighted that the district has recently avoided raising taxes to the limit it is allowed. Napoli responded to that comment bluntly. “Absolutely raise to the tax cap,” she said. “… To keep the district fiscally sound is important to all of us.”