After an audit, the Office of the New York State Comptroller released their report on the West Islip School District’s financial management from July 1, 2017, through Oct. 31, 2021.

According to the report, the audit’s objective was to “determine whether the West Islip Union Free School District’s Board of Education reasonably and transparently managed fund balance and reserves.”

The key findings of the report were as follows:

The board appropriated fund balance that was not needed to fund operations and was not transparent when funding reserves.

The board adopted budgets that overestimated appropriations by $24.6 million, or approximately 5.2 percent, over a four-year period.

The board annually appropriated fund balance that was not needed to pay operational expenses and made year-end unbudgeted transfers to reserves, in order to stay within the statutory surplus fund balance limit.

The board did not properly establish the workers’ compensation and unemployment insurance reserves, which are also overfunded, having enough money to pay the average annual expenses for eight and 51 years, respectively.

“We found significant variances, each year, for tuition and Eastern Suffolk Board of Cooperative Educational Services (BOCES) services for students with disabilities ($7.4 million), health insurance ($3.5 million), and employee retirement system (ERS) contributions ($1.5 million),” the audit report stated. “For example, over the four years the district appropriated $27.2 million for tuition and BOCES services for students with disabilities. However, actual expenditures totaled $19.7 million; $7.5 million less than budgeted appropriations. District officials overestimated tuition and BOCES services expenditures by 38 percent, or approximately $1.9 million, each year.”

The office of the comptroller offered key recommendations to the district in their report. The recommendations were to adopt realistic budgets and discontinue appropriating fund balance that is not needed and use overfunded reserves to benefit district residents as required. The report stated that district officials generally agreed with the recommendations and have initiated or indicated a plan to initiate corrective action.

In a letter to the community dated July 27, the West Islip School District noted that two of the years from the audit were impacted by the COVID-19 pandemic.

“In fact, while the district prepared its budget for the 2020-21 school year, the state threatened to withhold up to 20 percent of state aid,” the letter said. “To mitigate any reduction in foundation aid and its effect on district programs and its students, West Islip planned for a 10 percent decrease in its budget and increased the amount appropriated from reserves. Ultimately, the state did not withhold funding and the unanticipated state aid contributed to the surplus in the reserves.”

“The district agrees with the comptroller’s conclusion that two of the six reserves are overfunded and took steps to address those reserves when preparing the 2022-2023 budget,” the letter continued.

In May, the community voted for the establishment of a new capital reserve, which will be “partially funded with the excess monies from the workers’ compensation and unemployment reserves.”

“Projects that may be funded by this second capital reserve include additional security initiatives, classroom air conditioning (which will enhance building security), and improved facilities,” the district’s letter stated.

To view the entire report from the comptroller’s office as well as the district’s response visit https://www.osc.state.ny.us/local-government/audits/school-district/2022/07/08/west-islip-union-free-school-district-financial-management-2022m-40.