Audit: Weak Financial Practices at Lakeland Central Schools

ALBANY, N.Y. -- Because the Lakeland Central school district was not maintaining accurate financial records, the school board was unable to monitor spending effectively and the district ended the 2004-05 school year with a $1.2 million operating deficit, according to an audit released Monday in a press release by the state Comptroller’s office. Two years earlier the district had a $5 million surplus that it used to reduce the tax levy.

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Auditors found that the district allocated $3.4 million from surplus funds in 2002-03 and 2003-04 to finance operations. Essentially, the district planned an operating deficit and used surplus funds to fill that deficit and reduce the tax levy an acceptable practice in New York state because a district can only hold two percent of its budget in unreserved, unappropriated funds according to state law. But in 2004-05 the district incurred a $1.2 million unexpected operating deficit, which eliminated any remaining surplus the district had left.

Auditors found that the district’s deteriorating financial condition was caused by the school board’s failure to properly budget and monitor spending, which occurred in large part because district officials did not provide the board with accurate financial information.

District officials also did not keep accurate financial records for a $22.8 million capital project to improve the district’s elementary, middle and high schools and other district buildings, and ultimately the district overspent $563,488 for this project. Nor did the district file the proper documentation to request state aid for 18 projects over a six-year period. Auditors were unable to calculate the total amount of building aid that the district was due because the records were so poor. To remedy the situation, the district has hired a consultant to file the necessary paperwork with the state.

The district generally agreed with the audit findings and noted in its response to the audit that it has taken a number of steps to strengthen internal controls, train staff and improve its accounting systems.

-- NYSSCPA.org News Staff

Posted on 1/22/07