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Dec 27, 2013 3:35 PMPublication: The East Hampton Press

State Audit: Wainscott School Surplus Fund Balance 17 Times Greater Than Allowed By Law

Jan 2, 2014 6:58 AM

The Wainscott Common School District has accumulated an unexpended surplus fund balance that’s 17 times greater than what’s legally allowed by the state, according to the New York State Comptroller’s office.

In the summary of his school audit released on Friday, State Comptroller Thomas DiNapoli wrote that, over the last five years, district officials have consistently underestimated revenues and overestimated expenditures in board-adopted budgets to the tune of more than $1.7 million.

The report notes that, for the 2011-12 school year, the district’s unexpended surplus funds totaled $2.4 million—or 68 percent of that year’s budget—when state law requires that that amount not exceed approximately $140,000, or 4 percent of the total budget.

The fiscal examination notes similar excessive surpluses dating back to the 2007-08 school year. For example, that year, the surplus totaled $1,675,483, or 54 percent of the ensuing year’s nearly $3.1 million budget. The district only should have set aside $124,000 in reserves at that time.

The district’s surplus jumped by more than $1 million between the 2010-11 and 2011-12 school years alone, from about $1.34 million to nearly $2.37 million, due to the same practice of overestimating costs and underestimating income, according to the report.

“The board appropriated unexpended surplus funds each year, for a five-year total exceeding $3.1 million, to help finance the ensuing year’s operations,” Mr. DiNapoli stated in the release. “However, the district actually used less than $1.9 million of the appropriated fund balance during this period and accumulated an unexpended surplus fund balance 16 times the amount allowed by statute.”

District officials also increased the real property tax levy by more than $325,000 during the same period, he added, and have not developed a multi-year financial plan to address their long-term operational needs or the use of unspent surplus money in a way that would benefit taxpayers.

School officials, who could not be immediately reached for comment, have 90 days to file a written correction action plan with the state comptroller office.

Mr. DiNapoli also wrote in his report that Board of Education members need to improve their “oversight and management” of the budget. The audit examined the district’s books from April 1, 2011, through April 30, 2013, though auditors went back to 2007 as part of their fiscal examination.

In a response to the Comptroller's report, David Eagan, the president of the Wainscott School Board, wrote a letter explaining the circumstances around the school's finances.

"As a result, we have made several changes to our fiscal oversight," he wrote. "However, based on our unique circumstances, we cannot ascribe to the one-size-fits-all approach that is reflected in the report, and we fundamentally disagree with the report's characterization of our budget estimates as being 'unrealistic' and 'misleading;' frankly, nothing could be farther from the truth, based on our history and purpose."

He went on to say that the school receives virtually no state aid and relies almost entirely upon real estate taxes.

Additionally, he said that the school pays tuition and transportation fees to other schools to educate and bus students in the fourth through twelfth grades, since Wainscott School serves students from kindergarten through third grade. He said that not budgeting for unanticipated students—students that enroll unexpectedly—the school would run the risk of deficit spending.

"Over the last years the board has utilized fund balance to reduce the tax rate while maintaining all programs and our minimal staffing levels," Mr. Eagan stated.

Wainscott operates one school, a kindergarten through third grade building, and instructs approximately 15 students. It also employs four full-time and nine part-time workers, according to the audit.

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Washington could learn something from these folks.
By we could run this town! (129), the oceanfront trailer park on Dec 28, 13 10:24 AM
They could build themselves a nice gym/auditorium if they have to dump these surplus funds.
By BruceB (142), Sag Harbor on Dec 28, 13 8:27 PM

This is a typical example of many East End schools' disease of tax, tax, and tax some more, without delivering outstanding or even acceptable results inspite of virtually unlimited budgets without academic accountability.

Instead of using the overflowing tax funds judiciously and strategically to produce the finest educatoin in the land, given the huge expenditures per child, you simply tempt the teachers' and other unions to demand some of those surplus funds to pad their already ...more
By Obbservant (449), southampton on Dec 28, 13 8:37 PM
17 times??? That's downright abuse of tax payers IMO.
By double standard (1506), Remsenburg on Dec 29, 13 4:48 PM
1 member liked this comment
give it back to the taxpayers like Bridgehampton did 5 or 6 years ago. cannot keep it and cannot use it with no planning in place. just save some to buy out the supt. as many other districts have done.
By xtiego (698), bridgehampton on Jan 1, 14 4:48 PM
Xtiego, giving it back to the taxpayers doesn't fundamentally address the Board's and administrators' problems, that of misappropriating taxpayer funds. They have to fundamentally cut the budget to non-insanely excessive level of fiscal profligacy and address the quality of education they provide.

At $3.5 Million per annum funding the education of 15 children equates to roughly $233,333,000 expenditure per child, a certifiably psychopathic level of wanton excess and abuse. And of, they ...more
By Obbservant (449), southampton on Jan 3, 14 12:30 AM
2 members liked this comment
It would be cheaper to close the school, send the kids home and give them home tutors.
By chief1 (2800), southampton on Jan 3, 14 4:57 PM
Obb well said.
By xtiego (698), bridgehampton on Jan 5, 14 1:18 PM
To say Obbservant is misinformed regarding the basic facts and financial numbers concerning the Wainscott Common School District is an understatement. You have an obligation to be informed prior to giving you grossly overstated and misinformed opinion.
By Colt (37), Wainscott on Jan 6, 14 9:32 AM
Well then state the misinformation, Colt. Correct such misinformation. The only thing missing is Mr. Eagan's support of his rationalization that they do fund Wainscott children's tuition beyond the lower grades that he implies boosts their actual costs per pupil, but deliberately fails to give the number of students involved, because even added to the 15 in school, the number would likely still represent an absurd expenditure per child.

That conclusion is obvious with the NY State Comptroller's ...more
By Obbservant (449), southampton on Jan 6, 14 6:42 PM