Putnam Valley Central School District Financial Condition published by the New York State Comptroller’s Office and District Statement to the Public Regarding the Comptroller’s Report
Recently, the Division of Local Government and School Accountability completed an audit at the Putnam Valley School District. We applaud the New York State Comptroller’s mission to serve the taxpayers’ interests by attempting to improve the fiscal management of its local governments and schools in New York State. Their goal is to enable and encourage school officials to maintain or improve fiscal health by increasing efficiency and effectiveness, managing costs, and accounting for and protecting assets. There are always updated procedures and recommendations for local officials to adopt and administer.
The State Comptroller’s Office began auditing school districts more than a decade ago after certain Long Island School Districts were found to have lost millions of dollars due to criminal fraud, coupled with other waste and abuse of the financial resources of their school districts. We are pleased, that in the Comptroller’s just issued report for our school district that there are no findings of fraud, waste or abuse and our budgetary practices have been noted as being legal in all regards. We have posted the Comptroller’s Report of Examination for the Period Covered: July 1, 2014 – February 10, 2016, that includes the District’s response letter explaining the reasons for our actions, and the responsive corrective action plan that we will undertake to better our budgetary processes.
As in its analysis of many fiscally sound school districts that are able to maintain monies in reserve funds to stabilize their budgets, the Comptroller’s Office has criticized the District for not spending out of each reserve fund each year and for ending several school years without expending the entire amounts budgeted. The goal of budgeting proposed expenditures that match up exactly to actual expenditures is a theme in the Comptroller’s report that is unforgiving to the fact that a budget is a series of estimates and that no one knows exactly how much will need to be spent from the budget in a given school year.
The District has put monies into reserve funds and while the Comptroller has criticized the District for not spending out of these funds each year, having some monies in reserve funds is important to the District’s bond rating in financial markets. We are committed to placing the District in a position where its bond rating is not diminished by depleting lawfully maintained reserve funds because the Comptroller expects that they will be expended from each year. By way of example, Moody’s Investor’s service noted when making comments on another school district’s financial health that its: “…fund balance as a percent of operating revenues (7.2%) is well below the US median. Our total unrestricted fund balance in reserve funds is 5.4%.
It is also the District’s position that the reserves currently on hand help to facilitate a healthy state of fiscal responsibility that in turn creates good credit ratings in order to keep debt and financing low in the long run, saving taxpayers money each and every year. For example, in the past two years the District was able to refinance long term debt that will save the District over $1.4M dollars over the life of the bonds payable. Without its reserves, the District’s bond rating would not have provided the opportunity for this level of savings. There are many types of expenses that can change a District’s financial position and it is prudent to plan for those expenses in a responsible fashion. Reserve funds are the means for School Districts to do this and we will continue to act responsibly within the State’s Education Laws in order to do so.
While the state audit did not address the 15-16 budget or 16-17 budget, it is important to note that measures were taken to create a capital reserve fund that will play a significant role in protecting taxpayers from further debt. In the past two years, the District was able to reduce the budget, and lower the tax levy by $281,000.
A copy of the comptroller’s report is available on our website along with the District’s response and a mandated corrective action plan.