A year-long audit of the Walton Central School District by the Office of the New York State Comptroller found that district officials overestimated certain budget appropriations and appropriated more fund balance than needed.
When the district’s estimated revenues and appropriations were compared to actual operating results, the audit found that total variances were “generally reasonable,” but the report noted that some appropriations were “significantly overestimated.”
Medical insurance for employees was overestimated an average $354,000, or 9.2%, according to the report.
Ronda Williams, president of the Walton Board of Education, said the district budgeted extra funds for insurance because it recently switched carriers.
“We did not know the exact cost of the buyout, and we didn’t know the exact end date of the two-year contract,” she said, noting that the district ended up saving money by switching from NY44 to Excellus.
The audit found that the board increased the tax levy from $6.3 million in the 2016-2017 school year to more than $6.6 million in 2019-2020, with the intent to use the fund balance each year as a financing source.
The report noted that because the district experienced surpluses in two of the last three years, only $282,107 of the more than $1.9 million appropriated was used, increasing the surplus fund balance to more than $1.4 million by the end of 2018-2019.
New York Education Law imposes a statutory limit under which districts must maintain surplus fund balance, which the audit found Walton to exceed by 2.2 to 2.7 percentage points between 2016 and 2019.
“There are numerous contingencies that could occur during a fiscal year which may put significant financial strain on the District and could result in spikes in tax levies,” Interim Superintendent Lawrence Thomas wrote in his Jan. 7 response. “The District believes it is prudent to provide for possible contingencies within the adopted budget in order to protect District operations, and to protect the District’s taxpayers from unnecessary spikes in tax rates.”
The audit found that by consistently underestimating its fund balance, the district artificially inflated the tax levy, noting that “the Board levied more taxes than necessary to sustain operations and may have missed opportunities to more effectively manage fund balance and potentially reduce taxes.”
“Had officials maintained the same tax levy as in 2016-17 through 2018-19, taxpayers may potentially have realized approximately $319,000 in cumulative savings and the District still would not have used all of the fund balance that was appropriated,” the report read.
According to the United States Census Bureau’s 2017 American Community Survey, 27% of Walton residents live below the poverty level, more than any of the other 18 towns in Delaware County and nearly double the state rate.
When asked why district officials raised the tax levy year after year, given such a significant surplus, Williams said: “fund balance is different than cash on hand,” and did not address the district’s use of fund balance.
“They were very minimal increases, well below the 2% cap,” Williams said.
Walton taxpayers voted in May to establish a capital reserve, which Thomas said in his response will be funded in part by some of the surplus find balance.
Williams said the district is anticipating a capital project with several “well-needed” repairs, including to the parking lot and the middle school roof.
“Using any surplus funds in the capital reserve will help offset the cost to taxpayers,” she said.
Sarah Eames, staff writer, can be reached at email@example.com or 607-441-7213. Follow her @DS_SarahE on Twitter.