It makes good sense for the New York State Comptroller’s Office to call out school districts that pile up big unrestricted fund balances in excess of the statutory limit of 4 percent of the following year’s annual budget. But little Sagaponack has some unique circumstances that may well justify the need to keep a safe cushion.
Hitting property owners with budgets larger than necessary in order to build up cash reserves opens the door to political if not fiscal shenanigans. In the state’s many large districts with multi-million-dollar budgets, a lot of money can be siphoned into reserves even when they comply with the 4-percent limit.
Sagaponack, a K-3 district with a half dozen students enrolled, a dozen being sent to other schools for further education and a budget of about $1.6 million, has racked up a fund balance of $1.04 million or 61 percent of appropriations for the 2017-2018 school year, according to an audit report released last week by Comptroller Thomas DiNapoli.
That’s far more than the average statewide, where auditors say appropriations are overestimated by an average of $360,000 or 25 percent each year and reserve funds are overfunded by at least $35,000.
The district agreed the fund balance is bigger than necessary but made some good points in a written response to the audit report. Four percent of Sagaponack’s budget is only about $60,000, which is no cushion in a district where bussing and tuition costs for grades higher than fourth can fluctuate dramatically, depending on how many kids move in and out of the district and how many have special needs.
And despite the growing unallocated balance, the tax rate has fallen every year for a decade and will drop by another 28 percent when the district applies $350,000 to next year’s budget.
Sagaponack has very special circumstances: its tiny size, its huge tax base of about $5 billion and its susceptibility to sudden swings in expenses. It’s painless, even easy for the district to build up reserves and it makes sense that it maintains a safe cushion for surprises.