Reporter Editorial: School District’s finances are sound

When State Comptroller Thomas DiNapoli issued his “fiscal stress report” last week, it was designed to provide an early warning system to school districts that their financial houses might not be in order.

It sounds like a fine idea. But in practice, the report adds confusion, not clarity for taxpayers.
Listening to the analysis of its external auditors, Shelter Island School administrators thought the district was in fine fiscal shape. We tend to agree.

Why then was it cited by the comptroller for three areas reflecting that it was “susceptible to stress?”

A spokesman for Mr. DiNapoli played down the warning, saying it was at the lowest level of concern and explaining there’s no way for the comptroller to provide a serious vetting of 671 districts.

The comptroller chose seven areas to examine, but didn’t examine them in detail. To cite a district for making a tax anticipation note necessary because its fiscal year doesn’t coincide with the calendar year is something 85 percent of Suffolk County school districts have to do. Why? Because tax money doesn’t reach them for six months after the fiscal year starts. It has bills to pay between July and January and that can only be done by borrowing.

The second indication of possible stress, the comptroller said, was applying fund balance money to offset spending. But that’s something the comptroller’s office had required since Shelter Island’s fund balance was above the allowable four  percent of its budget.

The third example came with criticism of borrowing for capital expenses. The district doesn’t have a lot of debt and the administration and Board of Education were thoughtful about structuring the debt necessary for critical building repairs — and for a performance contract lowering energy costs that will save the district more than it has spent for the changes.

The comptroller needs to think twice about the impact his reports have on taxpayers. This report fails to reflect the fiscal soundness of the Shelter Island School District.

We have the utmost confidence in both the administration and Board of Education and do not believe the district is “susceptible to stress.”