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State Comptroller: Poor Budgeting Practices at Levittown Led to $6M Deficit

District Agrees With Recommendations, Has Already Implemented Corrective Measures

Inaccurate estimates on revenue and spending over several years led to a $6 million budget gap and $15.9 million in excess reserve funds at Levittown Schools, according to an audit released by State Comptroller Thomas P. DiNapoli.

The audit, which was completed at the request of the Levittown Board of Education and the Superintendent of Schools, was specifically asked to address how errors occurred. It covered July 2006 to September 2007.
“Accurate budgeting is essential for a school district to have a strong financial base and make sure taxpayers are not paying more property taxes than necessary,” DiNapoli said. “Levittown Union Free School District needs to accurately estimate its revenues and expenses and stop overfunding reserves.”

From 2004 to 2007, auditors found that the district’s actual revenues varied from its estimated revenues by as much as $5.5 million.

“Its actual expenditures varied from its estimated expenditures by as much as $9.6 million during the same period,” the report states.

Auditors also found the district established an employee benefit accrued liability reserve (EBALR), which was overfunded by $15.9 million “because the district is not obligated to pay its employees for unused sick and vacation time when they leave the district, making this reserve fund completely unnecessary.”

According to the state comptroller, once this money is placed in an EBALR, it legally only can be used for that purpose. The excess reserve funds are “stranded” in EBALR. The Levittown School District stopped this practice in 2007.

DiNapoli’s audit also found the district failed to request public bids for three contracts that exceeded the public bidding threshold, did not seek requests for proposals for procuring $795,225 in professional services, paid $22,950 in leave benefits that an administrator was not entitled to and paid $1 million in overtime without evidence that it was authorized, necessary and actually worked.

DiNapoli’s recommendations to district officials include preparing and approving budgets that accurately reflect estimated revenues and expenses; closely monitoring the district’s finances and taking action to avoid overspending its budget; only establishing reserve funds that are necessary; using reserved money as intended, and transferring excess funds to other authorized reserves and compensating employees based on their contract terms and board resolutions.

According to DiNapoli’s office, school district officials agreed with the audit’s recommendations and have already initiated corrective action to address some of the auditors’ concerns.

In a June 16 Superintendent’s Message to Levittown Residents, Dr. Herman Sirois said the audit confirms his initial findings regarding the cause of the error and “specifically identifies the individual who was responsible for them, how they were made, and how they were able to go unnoticed.”

Former Assistant Superintendent for Business and Finance Jeffrey Carlson oversaw the district’s finances until he left in June 2007 at the request of Dr. Sirois.

Dr. Sirois continued in his message that “the errors that were made had no adverse effect on the taxpayers of the Levittown School District, and included numerous recommendations to assure that such errors would not be able to occur again, and other recommendations to strengthen the financial operations of the district.”

He further apologized to the Levittown community for the errors that had occurred, and pledged “continued and renewed vigilance over all fiscal matters concerning the school district.”

To view the audit online, visit www.osc.state.ny.us/localgov/audits/schools/2009/levittown.pdf.