District Response to State Fiscal Designation

Posted on 01/24/2019
Today in the local and regional newspapers, you may have read that The Rockville Centre School District was identified as a District susceptible to fiscal stress. While reading news such as this may be unsettling, we would like to comment on the article and provide some insight as to the actual state of our financial affairs. While there are criteria used to create such designations, the decisions made by the District have actually ensured our financial stability, while being able to continue to run our programs and services at an optimal level. In addition, we take part in internal and external audits yearly and not once have those audits indicated the District is in any financial danger.

The State Comptroller Office has identified three areas that placed Rockville Centre on the susceptible list.

1. Undesignated Reserve: The State allows each District to have an undesignated reserve to be at 4% of total budget. According to the State Comptroller the Rockville Centre Schools have an undesignated reserve of 2.3 %. The District made the decision not to place unspent money into the undesignated reserve, but place it instead into a designated reserve that covers retirement expenses. Though the District could have placed the unspent money in the undesignated category, we chose the designated retirement reserve for good fiscal reasons. The decision not to create large undesignated reserves has been widely supported by the State Comptroller.

2. Fund Balance: The second reason concerns the total fund balance as a percent of total expenditures. Although the District has maintained a flat fund balance for the last eight years, because expenditures have risen, that percentage has now dropped below 10 percent. The State identifies this as a susceptible area of fiscal stress.

3. Short-Termed Borrowed Monies: As you may recall, we funded the renovation of the High School with a bond issue. Monies from the bond were held by the District until we were satisfied that all of the work had been completed. This meant that over the past few years, because there was money in the bank, we did not need to borrow as much as we had in earlier years in order to handle cash flow. In 2013-14 the District borrowed 15 million dollars for cash flow purposes. That number had declined to 8 million dollars in 2015-16 due to the cash on hand for bond purposes. Since the bond monies had been expended by 2017-18, the District borrowing increased to 11 million. The State considers an increase in borrowing as susceptible. Their focus is not on the amount borrowed, but on the increase in a single year.

While this may be a technical response to the article, we felt it was important to assure our School District community that the Rockville Centre Schools are thriving and will continue to do so. We expect that there will be more questions raised and we are happy to answer them. Please join us at our next Board of Education meeting on February 6, 2019 at 7:30 p.m. where we will review this in greater detail. In the meantime, the District will continue to manage its resources with the taxpayer in mind and continue to ensure that our children are afforded a strong and enriching education.