The state comptroller’s office on Thursday released the results of an audit that determined the Lockport City School District overestimated expenses and underestimated revenues by $9.4 million over the past five years.
The discrepancies resulted in surpluses that could have been used to reduce property taxes in the district, State Comptroller Thomas DiNapoli said.
The audit, which covered the district’s finances from July 2006 to May 2008, found the district increased the tax levy by 11 percent in the 2002-03 fiscal year, at the same time creating five new reserve funds and increasing the amount of funds in a sixth reserve.
The audit concluded the district should eliminate what it called “unnecessary funds” and use the surplus money to lower the district’s tax rate.
“Everyone wants to save for a rainy day, but it is unacceptable for school districts to hold money at the expense of taxpayers,” DiNapoli said in a news release. “The Lockport City School District needs to eliminate unnecessary reserve funds and use the surplus money to reduce the district’s property tax burden.”
Superintendent Terry Ann Carbone said the district will abide by the recommendations of the audit, but added she wanted to “personally applaud” the previous boards of education going back to the 2002-03 fiscal year “for having the good sense to develop and maintain these reserves.”
“At a time like this, these reserves are going to be a lifesaver,” she said. “Thank goodness Lockport had the foresight to put some money away for a rainy day, because in the next budget, it will be raining.”
Since their creation, the five reserve funds have not been used, the audit said. The sixth reserve was used in the 2004-05 fiscal year to pay for debt service, and the balance in that reserve in June 2007 was $2.28 million.
The reserve funds include:
• Worker’s compensation, which started in the 2002-03 fiscal year with $400,000. With interest, it grew to $463,200 in June 2007
• Unemployment insurance, which started with $75,000 and with interest and additional allocations has grown to $115,000
• Insurance, which started with $750,000 and has grown to $866,200
• Tax certiorari, which started with $400,000 and has grown to $698,831
• Employee benefit accrued liability, which started with $2 million and has grown to $3.6 million.
“Since no justification could be provided ... for reporting this substantial amount of resources in this manner, these moneys should be transferred to unreserved fund balance in the general fund and used to reduce the property tax levy,” the audit said.
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LOCKPORT: Audit faults city school finances
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