Merrick’s school district consistently overstated its annual budget expenditures by a cumulative $6.9 million over a four-year period and maintained a funding surplus that exceeded the legally allowed limit, the state auditor’s office reported.
An audit report released Friday by State Comptroller Thomas DiNapoli acknowledged that since 2015, Merrick had reduced its cash surplus from the equivalent of 19% of the annual budget to 8% of the budget. Nevertheless, the report added that the 8% figure is twice the 4% allowed by state tax law and further reductions are needed.
“These practices lack transparency, circumvent statutory surplus balance limits, and potentially expose taxpayers to higher taxes than necessary,” state auditors said of Merrick’s management of surplus funds. .
The 11-page report focuses on the district’s funding practices during the 2019-20 and 2022-23 school years, but also touches on the previous four years.
The Merrick Elementary School District enrolls approximately 1,600 students in kindergarten through sixth grade and operates on this year’s voter-approved $63 million budget.
In response to state auditors, longtime Merrick City Schools Superintendent Dominic Palma said the district’s “unallocated” fund balance, or fund balance not allocated to a specific purpose, is actually 6. As of March 30th, it was approximately 4.3% of the budget. The letter continued that Merrick’s financial position is fundamentally sound.
“With the continued support of the community, the Merrick Union Free School District maintains a strong financial position with annual external audits, a stable bond rating, and a lack of financial stress with audit reports,” Palma wrote. Ta.
The letter was addressed to Ira McCracken, regional audit director for the City of Hauppauge Comptroller’s Office, who drafted the report.
The district’s cash surplus is a troubling problem not only in the region but across the state. In July, Newsday reported that 19 districts on the island were accumulating surpluses above the 4% limit. Gov. Kathy Hochul has reprimanded districts for overfunding and asked them to submit a report on this and other issues by Dec. 1.
Friday’s report marks the second time in eight years that the Comptroller’s Office, which acts as a financial watchdog, has scrutinized Merrick’s finances. An October 2016 report, also sent to Parma, showed the district’s fund balance was $9 million, or about 19.3 percent of next year’s budget.
One of the recommendations in the previous report was that the district revise its funding balance policy. In Friday’s report, auditors said district board members acknowledged that the district’s fund balance remains above 4%, but the board and district staff did not agree with the auditor’s original recommendation. It added that it had not yet adopted a policy mandating compliance.
Palma claims in his response that this is inaccurate. He said a plan for the district’s reserves and fund balance will be submitted to the board on Nov. 14, 2023, and updated annually. He added that he will ask the district to formally adopt the plan at its November board meeting.
Palma announced in September that the superintendent would retire from his position on June 30, at the end of this school year. A spokesperson Friday said the superintendent had nothing to add beyond the audit response letter.
John Hildebrand is Newsday’s senior education writer and has covered school news and policy issues affecting Long Island for more than 40 years.
