Briarcliff School Reserves Have Increased, Still in Search of Assumptions

It is becoming increasingly apparent that the Board of Education ("BOE") is capable of developing a property tax compliant budget that does not fire any teachers or teaching assistants and retains modified sports and co-curricular clubs. All that is needed is the will to do so.

"No such document exists," was the answer I received when I requested, under the Freedom of Information Law, the details of the draft budget and the assumptions utilized for the budget. Accordingly, I have filed an appeal of the denialeffective denial of my request and I'm awaiting a response from the District.*

A line-by-line budget has to exist - it is the foundation of any summary budget numbers that have been presented to the public. School districts around Westchester post the details of their budgets on their websites. A Board Member publicly stated at the March 11 BOE meeting that not only did he have the assumptions for contractual obligations used in the budget but that he would provide it to the public. Unfortunately, the information has yet to be released. The public needs to see the information to decide whether the budget was formulated in an educationally prudent and fiscally responsible manner. I need the information to finalize my budget calculations.

Many other districts in Westchester have challenges similar to ours but have prepared budgets with much smaller increases to expenses than we have. "Rollover" budgets, which retain all employees and programs, are a significant tool to compare the budget process across similar districts. While other districts are projecting expense increases in rollover budgets (or essentially rollover budgets) in the 2% - 5% range, our rollover budget produces an expense increase of almost 7%. If we used assumptions similar to the other districts, our "budget shortfall" would be substantially reduced.

The BOE sent out an email concerning the budget and had to issue a series of corrections as a result of community members' work. Unfortunately, material information in every version of the email continues to be inaccurate.

The BOE said "Today, the total tax levy-what the community pays in school taxes-is actually less than it was in 2009! How was it achieved? In one word: RESERVES." In actuality, the District's lawful reserves actually increased (not decreased) from $4,471,082 on June 30, 2009 to $5,806,422 on June 30, 2012, almost $1,400,000.**

Moody's has given the District an Aa2 rating, one of its highest, and has depicted the District's June 30, 2012 financial position as "Healthy Financial Operations with Solid Reserve Levels." The BOE is aware of this, as O'Connor Davies, LLP, the outside auditors, believed it was important enough to include these comments in its presentation to the BOE on September 24, 2012.

The BOE also indicated in its emails that the total amount of state aid has declined by $670,000 since 2009. While that statement may be technically true, state aid has actually increased by $400,000 (and maybe as much as $580,000) since the year ended June 30, 2012 - in just two years. Accordingly, the BOE has substantially more state aid available than recent Boards.

It was the BOE, and not the Administration that signed these emails. The BOE's refusal to release information and the repeated dissemination of inaccurate information is indicative of a Board that has lost control of financial oversight, and one that has not lived up to its promise of transparency.

Members of the community experienced in budgetary matters have volunteered to assist in the process, but the BOE has still not been willing to accept help. At this point, it is difficult to have confidence in the BOE's budget process, making it difficult to garner the requisite 60 per cent supermajority vote. As it is already April 1, and the Board plans to adopt a budget in several weeks, time is running out. The BOE needs to accept the help of those who are experienced enough to develop a budget acceptable to the community.

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My credentials: C.P.A. since 1979, M.B.A. Accounting, University of Michigan; M.S. Taxation, Pace University; Partner, BDO Seidman; Chief Financial Officer; due diligence and forensic accounting work.

* On March 13, 2013, I filed FOIL requests for the line-by-line details of the draft budgets and the assumptions used for contractual obligations. The District responded on March 22, 2013 that "No such document exists," for both requests. I appealed the denialeffective denial of my requests to the Superintendent on March 22, 2013. I am awaiting a response.

** New York State School Law, 33rd Edition, published by the New York State School Boards Association and the New York State Bar Association, states that "A reserve fund is a separate account established by a school district to finance various district costs. It can be thought of as a savings account for a specific purpose." The State Education Department indicates that "The following Reserve Funds are available to school districts:" "Capital Reserve, Repair Reserve, Workers' Compensation Reserve, Unemployment Insurance Reserve, Reserve for Tax Reduction, Mandatory Reserve for Debt Service, Insurance Reserve, Property Loss and Liability Reserve, Tax Certiorari Reserve, Reserve for Insurance Recoveries, Reserve for Encumbrances, Reserve for Inventory, and Reserve for Employee Benefit Accrual Liability."