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State Comptroller's 'Susceptible to Fiscal Stress' label misleading, Rockville Centre school officials say

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The Rockville Centre School District is one of 21 districts in the state deemed susceptible to fiscal stress, according to a report released last week by State Comptroller Thomas P. DiNapoli. Five other districts were categorized as having significant fiscal stress.

“Despite the ongoing financial pressures facing school districts, our fiscal stress monitoring system has revealed en-couraging results in several communities,” DiNapoli said in a news release. “However, school boards and superintendents must remain cautious. Today’s budget decisions can have long-lasting implications and can quickly move a district into fiscal stress.”

Using financial indicators that include year-end fund balance, cash position, short-term borrowing and patterns of operating deficits, DiNapoli’s monitoring system tallies an overall fiscal stress score, which drives the classification.

“While reading news such as this may be unsettling, we would like to . . . provide some insight as to the actual state of our financial affairs,” the Rockville Centre district wrote in a statement that was posted on its website on Jan. 24. “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.”

The district noted that Rockville Centre’s fiscal designation resulted from the state’s concerns about its undesignated reserves, fund balance and short-term borrowing.

District officials noted that its undesignated reserves amount to 2.3 percent of its budget, which is below the 4 percent allowed by the state. The district could have placed unspent money in that reserve, ac-cording to the statement, but in-stead put it into a designated reserve, which covers re-tirement expenses. “The decision not to create large undesignated re-serves has been widely supported by the state comptroller,” the district stated.

The district’s fund balance, in relation to its total expenditures, is below 10 percent, which the state also considered to be a red flag. The fund balance, partly comprising reserves left over after balancing expenses and revenues, has been stable over the last decade, according to Robert Bartels, the district’s assistant superintendent for business and personnel, but dipped below the 10 percent threshold as expenses have risen. “The goal,” Bartels said, “is to balance your revenues and your expenditures and not tax the taxpayers extra monies that we don’t need to tax them for,” which he noted the district would continue to do.

The district’s borrowing also increased from $9 million in the 2016-17 school year to $11.5 million in 2017-18. The rise, which the state considers to be a potential prescursor to fiscal stress, school officials noted, came after money from a $45 million bond, which covered ad-ditions and renovations to South Side High School and other projects, was spent. A total of $35 million of that bond was issued in December 2014, and the remaining $10 million was made available in 2016. Once that money was used, borrowing returned to normal levels last year, according to Bartels.

“The state is not basing this on how much money you actually borrowed, but the increase in any given year,” Bartels said. “We’re trying to manage our money so when we have money from the bond sitting here to pay other expenses, we can manage that so we don’t have to borrow as much short-term.”

Bartels added that if the district had borrowed $11.5 million in 2016-17, like it did in 2017-18, for example, it would not have received the designation because borrowing would have been flat. “We don’t pay too much attention to the state calculations, especially in this situation,” he said.

Schools Superintendent Dr. William Johnson added that there was no corrective action needed. “We made a strategic decision about where we were going to place our money and how we were going to borrow money in the last few years,” he said.

The comptroller’s fiscal scores are based on financial information submitted as part of each district’s ST-3 financial report filed with the State Education Department as of Dec. 28. A total of 672 school districts were evaluated; the monitoring system does not score New York City. Four other districts from Nassau County, including North Bellmore, Roosevelt, Hempstead and Long Beach, joined Rockville Centre as susceptible to fiscal stress.

“We felt it was important to assure our school district community that the Rockville Centre schools are thriving and will continue to do so,” the district’s statement said.

Details about the district’s finances will be discussed at the next Board of Education meeting on Feb. 6, at 7:30 p.m.