Auditor: East Quogue School Still Under Fiscal Stress, Though Situation Is Improving

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The East Quogue School District is heading in the right direction in terms of finances, though a private auditor informed the Board of Education that the district is still suffering from “moderate fiscal stress.”

Conducted by Cullen & Danowski LLP of Port Jefferson Station, the recently completed internal audit, which examined the district’s books for the 2013-14 school year, pointed to a decrease in the general fund as the main cause of that fiscal distress.

“But you are improving,” Jennifer Ditta, an auditor from Cullen & Danowski, told members of the board while briefly addressing them during their most recent meeting on October 21.

Earlier this year, the state comptroller’s office classified the East Quogue School District as one of seven Long Island districts—and the only one on the South Fork—suffering from “moderate fiscal stress,” using a system that identifies early warning signs of economic troubles. The factors examined included fund balances, operating deficits, cash on hand, cash flow borrowing and fixed costs, as well as certain demographic factors, like changes in population, property values and child poverty rates.

East Quogue’s general fund decreased by almost 7.4 percent, from $2,074,239 in 2013 to $1,921,828 in 2014, according to the report. This drop-off contributed to a decrease in the district’s total fund balance, which fell by almost 12.1 percent, from $2,230,854 in 2013 to $1,962,002 in 2014.

Districts are asked to maintain an unassigned fund balance that represents between 3 and 4 percent of their total operating budgets. East Quogue has fallen below that line for the past two years. In 2013, its unassigned fund balance stood at $382,979, or 1.71 percent of that year’s $22.4 million operating budget. As of 2014, the balance now stands at $533,486, or 2.34 percent of the $22.8 million budget.

School Superintendent Les Black explained that the district pulled money from the general fund while creating this year’s budget in order to prevent the spending plan from piercing the mandated 2-percent tax cap.

“The tax cap is strangling many districts,” Mr. Black said on Tuesday. “So, we used some of our fund balance to support the budget.”

The district has tried to pierce the cap in the past—with terrible results. In May 2013, the board pitched a budget that pierced the cap and would have increased overall spending by 2.9 percent, but that measure fell seven votes shy of passing; 60 percent of voters must support a school budget that pierces the cap. As a result, the district had to make an additional $600,000 in cuts, moves that eliminated a custodial position, three special education teachers and multiple teachers’ aides and assistants.

Two years ago, the district underestimated how much tuition it would need to pay the Westhampton Beach School District to educate its middle and high school students by about $400,000, an oversight that has contributed to East Quogue’s current fiscal woes. Tuition makes up about half of East Quogue’s annual expenses; the district has only an elementary school.

“Billings from tuition are estimated during the year and reconciled in the subsequent year,” the audit states, “resulting in either a refund in tuition or additional amounts due to the receiving district.”

Mr. Black said this week that since his district could not pierce the tax cap, it has been trying to find creative solutions to keep faculty and programs without burdening taxpayers.

“There’s a wonderful education program here and we’re trying to hold onto it,” he said. “We’re heading in a positive direction, but I’m somewhat apprehensive about what the tax cap will do to us and to many schools in the near future.”

Patricia Tuzzolo, vice president of the Board of Education, did not return calls seeking comment this week about the audit.

Mr. Black, meanwhile, noted that his goal to rebuild the fund balance—which, he pointed out, the district is doing, just at a slower rate—is contingent on the tax cap and how much East Quogue will be allowed to spend in coming years.

“It’s difficult to say what we’re going to do,” he said. “It’s a difficult economic time for public schools.”

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