The Rochester City School District failed on several levels in budgeting and financial planning and the result was a multimillion dollar deficit, according to a report released April 21 by the state comptroller.
“We found the district failed to use reasonable estimates to balance its 2018-19 budget, neglected to follow its own fund balance policy and did not prepare a multiyear financial plan,” wrote Comptroller Thomas P. DiNapoli. “… The Rochester City School District can do significantly more to improve its budgeting and financial planning.”
The key findings were:
- The board and district officials neglected to use accurate estimates of appropriations to balance the 2018-19 budget, which contributed to an unplanned operating deficit of $27.4 million.
- The board failed to adopt a structurally balanced budget and did not follow its fund balance policy when it appropriated fund balance to finance the 2018-19 budget.
- The district lacks a comprehensive multiyear financial plan.
“The goal of my office’s report is to provide greater clarity on the district’s fiscal condition and provide independent information that can help it navigate the serious challenges the Rochester community faces as they prepare the 2020-21 budget in these especially challenging times,” DiNapoli wrote. “We’ll continue to work with the district and will further examine the budgetary controls and monitoring problems that lead to the 2018-19 deficit.”
Key recommendations are that the board and district officials develop and adopt structurally balanced budgets that:
- Include realistic estimates of revenues and appropriations based on historical trends or other known factors.
- Comply with the board’s fund balance policy and include a plan to eliminate the fund balance deficit and restore and maintain minimum thresholds.
- Contain comprehensive multiyear financial plans with goals and objectives for funding long-term operating needs.
The comptroller had issued a brief report in January. The report released April 21, titled Budgeting and Multiyear Financial Planning, is more comprehensive.
In their response to the audit, Superintendent Terry Dade and Board of Education President Van White expressed general agreement with the assessments and underlying analysis. They agreed with and accepted the recommendations in the report.
They wrote that the district is working with the board on a final proposed budget for 2020-21. “Upon your review, we expect you will conclude our approach to budgeting is more methodical, more thoughtful and more deliberate in achieving a platform of academic success for our students that is financially secure and sustainable,” they wrote.
In an interview about the audit, White said the board already has made changes in how it records spending. It regularly gets requests in what are called resolutions. White said that instead of waiting for a quarterly report, the board wants to know how much is left in the particular account after the request is granted.
For the upcoming academic year, Dade has projected an $87 million deficit. His proposed budget calls for cuts in personnel and programs, closing two schools and making cuts to spending at East High School.
Dade became superintendent in July 2019.
The comptroller’s audit was for July 1, 2018 through March 12, 2020 but reviewers looked back to July 1, 2015 for trend analysis.
The audit looked at underestimations in six areas: health and benefits; substitutes; charter school tuition; retirement; contract transportation and BOCES. The narrative would not surprise anyone who has heard Dade talk about the deficit. In the months since the budget problems surfaced, Dade has said that those were key areas contributing to the deficit.
The deficit also was mentioned in the November 2018 report by the Distinguished Educator. One of this findings stated that most stakeholders lacked real understanding of the structural deficit and that up to that time, no significant actions had been taken to address the challenges.
The state Education Department is requiring the district have a financial monitor.