State says M-W increased tax levy $9.3 million while holding $13.6 million surplus

CENTRAL VALLEY — The Monroe-Woodbury School District overestimated appropriations, leading to more than $13.6 million in operating surpluses, according to an audit released late last week by State Comptroller Thomas P. DiNapoli.

The comptroller’s office also said the school district failed to fully inform the public of this surplus while increasing the tax levy for the last three fiscal years by a total of $9.3 million.

Monroe-Woodbury school officials, however, question the results, describing the audit in a press release as a report that “essentially criticizes the district for saving too much money. The criticism is questionable given that the district has limited its spending growth to less than 1 percent in recent years, corresponding to record low tax levies.”

The Monroe-Woodbury district covers seven schools with 7,400 students and has 2011-12 budgeted expenditures of $149 million.

Findings According to the comptroller’s office:

The audit found that the district consistently overestimated expenditures. During the three years covered by the audit, 2008-09 through 2010-11, the accumulated fund balance exceeded the statutory limit of 4 percent of the ensuing years’ budgets.

Auditors also found that the district did not comply with the general municipal law requiring district officials to make audit reports readily available and failed to submit 12 required quarterly reports to the Comptroller’s office related to a $6 million debt issuance in 2003.

“The district collected more than was needed and amassed large surpluses without full transparency,” DiNapoli said. “Monroe-Woodbury should adopt our recommendations to improve district operations.”

Response In the district’s press release about its response, School Board President Michael DiGeronimo said the school board, not the state Comptroller’s Office, is legally tasked with determining the appropriate amount of money to be placed in reserve funds.

School officials also said the audit inaccurately states that Monroe-Woodbury circumvented the 4 percent limit by intentionally appropriating more money than the district needed for its budget, DiGeronimo said.

”We did not circumvent the law in any way,” DiGeronimo said. “We were just budgeting responsibly.”

Most of the difference in the district’s actual revenue compared to what was budgeted can be attributed to the district receiving more state aid each year than had been estimated, DiGeronimo said. With this additional funding in hand, the district did not need to tap into its existing reserves to meet that year’s expenses.

Moody’s upgrade At a time when many districts are laying off teachers and cutting educational programs, Monroe-Woodbury is in a strong financial position largely because of the way it has managed its reserves, Jeffrey White, Monroe-Woodbury assistant superintendent for business and management services.

White also added that the district has not violated any laws and has strictly adhered to Generally Accepted Accounting Principles.

“If we were to follow some of these recommendations from the comptroller, we would be putting the district at risk by not having the proper savings in place,” White said.

The district has been able to keep its spending in line and has kept tax increases low, DiGeronimo said.

Spending growth for the past three years has been restricted to under 1 percent, with approximately $23 million removed from the budget, school officials noted.

School officials also noted that in November 2010, Moody’s Investor Services upgraded Monroe-Woodbury’s credit rating to Aa3 with a stable outlook - the highest rating in the district’s history– citing “structurally balanced operations,” of which fund balance and reserves are a major component, and “strong financial management” among the reasons.

- Bob Quinn