ELLENBURG – State audits of Northern Adirondack Central School District criticized the district’s previously heavy reliance on its unexpended fund balance to pay for school operations.

Expenditures exceeded budget appropriations by $626,000 for two school years, 2017-18 and 2018-19, and the district used $1.5 million in unappropriated fund balance to cover the gap the audit by state Comptroller Thomas P. DiNapoli’s office found.

By doing that, the total fund balance went from about $2.5 million at the beginning of 2017-18 to about $1 million at the end of 2018-19.

The Board of Education didn’t adopt a multiyear financial plan or any plan to address the declining reserve, state auditors said.

The state Comptroller’s Office, in a separate audit, said school employees are allowed to earn vacation leave accruals that exceed the amount allowed in board-approved labor contracts, and errors were found in the leave records maintained for 24 of the 33 employees checked.

That meant the district overpaid seven employees $29,686 for unused leave.

Auditors said the school board must ensure workers don’t use leave they aren’t entitled to and discuss overpayments with the district’s legal counsel so there can be action to recover the funds.

Superintendent James Knight Jr. responded to the audits, along with Board President Paul Gilmore.

On the leave accruals, the district disagrees with the auditors on how many days off employees can accumulate and how many days they work.

“The district is to a large extent not in agreement with the overpayment amounts determined during the audit process, and thus would not be seeking legal counsel regarding these amounts,” Knight and Gilmore wrote. “The district will likely seek guidance regarding adding clarity and more precise wording to certain of our collective bargaining agreements.”

On the budget issue, the district should adopt realistic budgets and develop a comprehensive multiyear financial plan that does something about the declining fund balance, the state said.

“During 2017-2018 and 2018-2019, the district incurred significant unanticipated cost increases, which were not identified until after the respective budgets had been adopted and voter approved,” Knight and Gilmore wrote in a plan of correction. “These increases included a mid-year health insurance increase during 2017-2018, notification of a large increase in foster care placements received in June 2017, and a large increase in special education, BOCES placements, for 2018-2019.”

Those resulted in a lag in budget inclusion, they said.

“The budget process has, to a large extent, caught up with the lag, with 2019-2020 expenditures projected to be below appropriations.”

To write multiyear financial plans, the district has acquired the ForeCast5 software package.

“Multiple scenarios were built for board consideration during the 2020-2021 budget development process,” Knight and Gilmore wrote. “The various models outlined the interaction between estimated revenues and appropriations, and the resulting effect on the attempt to rebuild the fund balance reserve level. The 2020-2021 budget, approved by the voters on June 16, was structured to increase the community support level via the tax levy and should help address the declining fund balance.”

The district’s 2020-2021 budget increases the tax levy by 49%, but Knight said it was necessary to avoid financial insolvency in three to four years.

Property taxes for Northern Adirondack Central School District were kept artificially low for years, Knight, a first-year superintendent, said, when they should have been increasing.

The average tax rate went from $12.03 per $1,000 of assessed value to $17.38 in the 2020-2021 budget –– an increase that would add $500 to the tax bill on a property assessed at $100,000.

The Northern Adirondack Central School District includes the towns of Altona, Beekmantown, Chazy, Clinton, Dannemora, Ellenburg, Mooers and Saranac in Clinton County and a portion of the town of Bellmont in Franklin County.

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