CUBA — The state’s analysis of Cuba-Rushford School District’s financials dating from July 2011 through March 2015 showed that the district overestimated expenditures and was storing too much money in reserve, according to an audit.
District officials overestimated expenditures by $8.5 million during the four‑year period; they ranged from 7 percent to 14 percent more than actual expenditures, according to State Comptroller Thomas DiNapoli’s audit released late last month.
In addition, the district’s unrestricted fund balance — or surplus — annually exceeded the 4 percent statutory limits. Also, its reserves — funds designed for specific expenses — are overfunded by approximately $3.2 million, according to the audit.
“Although district officials adopted budgets which included appropriated fund balance, due to their overestimation of expenditures, the total appropriated fund balance was not needed. Despite the excess unrestricted fund balance, district officials continued to raise taxes each of the four years,” auditors said in the report.
District Superintendent Carlos Gildemeister said the district didn’t overestimate its budget. He said funding for each item was projected based on previous years’ expenses, and then the district found ways to save money through sharing services and bidding on supplies.
Over the past couple of years, the shared-services plans for health insurance, special education and transportation created savings, and the district held those savings in an assigned fund balance in case any of those cost-saving measures didn’t work out. Once it determined the plans were working, the money was placed into the unrestricted fund balance, which sent the district over the 4 percent threshold, the superintendent explained.
Some of the savings that sent them over the allowable surplus amount has since been applied to bus purchases and towards lowering the budget.
“Budgeting and adjusting the budget is a slow process. The audit does not indicate or demonstrate that we are adjusting the budget as we experience savings,” the superintendent said. “The district has reduced the budget for this year and is reducing its tax levy by more than 2.5 percent as we see the positive results of bidding all supplies and services and creating shared-service opportunities.”
The district will continue to tap into its fund balance to balance future spending plans, the superintendent said.
As for what the audit said about the district’s reserves, district officials said they haven’t added money to the Employee Benefit Accrued Liability Reserve since 2008, and they’ve been spending the funds in that reserve as necessary.
The superintendent added that the district is slowing spending its other reserves, as well, but that it’s trying to maintain some funding in its coffers in the event that a national financial crisis like the one that affected school districts during the 2009-10 year occurs.
During that year, the district lost more than $850,000 in state aid. It laid off 34 staff members, reduced programs, closed its elementary school in Rushford and sold its annex in Cuba.
Gildemeister doesn’t want a replay of the financial struggles the district faced during that time.
“As a result of what happened during that year, we budget more conservatively for scenarios and unforeseen circumstances. It’s better to have a good five-year budget and reserve plan than to spend down our savings quickly,” the superintendent said. “These plans create stability, and that’s better for the district and that taxpayers. I think we’re doing a great job.”
(Contact reporter Darlene M. Donohue at email@example.com. Follow her on Twitter, @DarleneMDono)