Cooperstown Central School Decides to Stop Hoarding Money Illegally

Tendentious headline? Yes. 100% true? Yes.

The Cooperstown Crier reports that CCS will finally taken action to reduce its unreserved fund balance:

The Cooperstown Central School board of education has approved a plan to reduce the amount of money in the unreserved fund balance to two percent of the total budget, the maximum amount allowed by state law.

According to a fund balance reduction proposal, the projected unreserved fund balance will be $975,000 at the end of the fiscal year, June 30.

New York State Real Property Tax Law requires that school districts maintain unreserved fund balances of not greater than two percent of the subsequent year’s budget, or about $317,000 this year.

In July, 2007, the money will be applied to the increased tax burden and several small reserve funds will be created for employee benefits. We first heard of this problem a year ago:

The amount of money in the district’s fund balance was first questioned at a board meeting last April and brought up at meetings for several months as residents criticized the district for retaining more money than was legal to do so.

District officials estimated the unreserved fund balance amount at $1.29 million at the start of the 2005-2006 fiscal year, almost $1 million more than it was allowed to have.

Being over by a few dollars is one thing. Being over by 300% of the legally-allowed maximum shows contempt and ignorance toward the law. Or maybe it’s a willfully-blind eye?

Board president Anthony Scalici said the fund balance became an issue recently because increased state aid and unexpected reduced expenses resulted in more money going into the fund balance.

And because it grew so large, it drew more attention, he said.

“It’s a tough issue,” he said. “Yes, there’s an official rule, but it’s not enforced and there are benefits to holding onto the money. But that’s not what people want us to do.”

You’re right, President Scalici. We want our elected officials to know the law and follow it rather than skirt it until they get caught. That isn’t too much to ask. Why don’t they want to comply, though?

Superintendent Mary Jo McPhail said the board is still concerned that two percent is not enough of a reserve to deal with unforeseen costs in today’s economic climate.

“Two percent is not sufficient in today’s economy,” she said. “They still have that concern, but they are sensitive to wanting to be very transparent as far as their fiduciary responsibility.”

Superintendent McPhail, undoubtedly under the advisement of Alan Greenspan [I imagine this is how he spends his retirement?], has concluded that the reserve isn’t enough. Is that accurate? I can’t say for sure, I haven’t crunched the numbers. I do know that the proper way to handle this is to request an exemption or fight the state to have it changed – and in the meantime, you comply fully.

That’s better than avoiding the issue for several years, ignoring the findings of an audit, lying to the public [compare their 2006 comments SHARETHIS.addEntry({ title: "Cooperstown Central School Decides to Stop Hoarding Money Illegally", url: "http://www.matthewktabor.com/2007/04/12/cooperstown-central-school-decides-to-stop-hoarding-money-illegally/" });