LBSD receives positive audit

Trustees concerned about food services deficit


The Long Beach School District’s auditing firm, Cullen & Danowski LLP, issued the results of a financial report at the Nov. 8 Board of Education meeting, having analyzed the district’s spending and operating budget for the 2017-18 school year and determined that the district is in good financial condition.

Jill Sanders, a partner at the firm, said the district received a positive review because administrators and trustees have closely monitored the budget and generated revenue “whenever possible.” The auditors also highlighted $2 million in savings when the district refinanced some of its outstanding bonds.

The positive review contrasts with a report issued by State Comptroller Tom DiNapoli’s office in February, which gave the district a “fiscally stressed” designation for the fourth consecutive year. School officials said that that designation did not account for pending reimbursements related to Hurricane Sandy.

The district sustained more than $35 million in damage from Sandy. While the district’s storm-related expenses were paid off, it is still waiting to receive a portion of reimbursements from the Federal Emergency Management Agency, school officials said. Because the money has not yet been restored to district bank accounts, DiNapoli’s assessment was more negative, they explained.

“When we look at your capital project schedule, you have actually laid out money to take care of Superstorm Sandy damages, renovations and im-provements,” Sanders said of Cullen & Danowski’s reasoning, “and you have not received all of that money yet from the state or the federal government.”

Sanders also highlighted the district’s level of unassigned fund balance, the amount of unused or unappropriated funds. In April, the board adopted a $140 million budget that included a $2.9 million tax-levy increase, but some of the unassigned funds were used to offset the tax levy. “There’s a minor change in the unassigned fund balance — $149,000 — and you returned to the community $351,000 in round numbers to reduce the tax levy,” she said.

Additionally, in the spring, voters approved the establishment of a new capital reserve fund to pay for building improvements throughout the district. In June, the district transferred $3.5 million of its budget surplus to that reserve, Sanders said.

She also commended how the district addressed shortfalls in the food services fund for the past few years. “Your food service program needed a bit more funding, so the board transferred some additional money from the general fund” — about $168,000 — “to the food service fund,” Sanders said. “That comes out of unassigned fund balance.”

School officials said the district had lost about $400,000 in food services in each of the two previous years because of a lack of student participation in the federally funded National School Lunch Program, which partially reimburses the district for lunches the agency considers healthy.

“Every year we have a line item in the general fund budget of several hundred thousand dollars to meet the gap between revenue and expenses,” the district’s chief operating officer, Michael DeVito, said of the food services program, adding that if that doesn’t cover the deficit, money is taken from the unassigned fund balance.

School Board President Dr. Dennis Ryan noted his concern with the food service program. “That we bleed every year in this program might give us a cause to possibly reconsider what we tried to do two years ago, when we had a conversation concerning privatizing food services,” he said. “So we may want to have that discussion again.”

Last year, the board rejected a plan to privatize the district’s lunch program.

“We’d certainly be remiss if we didn’t take a minute to thank Mr. DeVito,” Ryan said, “because . . . we certainly know how lucky we are to have [him] every time Ms. Sanders comes and tell us how fiscally fit we are. It’s certainly nice to have a public presentation that has such positive news to it, so we’re grateful for hearing that.”