Mineola school officials consistently accumulated unneeded cash surpluses over a four-year period, even as they provided extra services required by the COVID-19 pandemic, state auditors reported this week.
Results of the audit from the state Comptroller’s Office found that Mineola produced surpluses totaling more than $20 million over a period beginning with the 2016-17 school year and ending in 2019-20. The district’s current total annual budget is $111.8 million.
“The board and district officials did not effectively manage the district’s financial condition,” stated the report from the office of Comptroller Thomas DiNapoli. “As a result, more taxes were levied than were needed to fund operations.”
In response, Mineola’s superintendent, Michael Nagler, said his administration followed a policy of “conservative budgeting” and “responsible cost savings” that provided the 2,800-student system with financial stability. Nagler added that the system used cash surpluses, known as fund balances, to finance yearly building repairs and renovations.
“Last year, the district had a zero levy,” Nadler told Newsday in reference to taxes. “For the past 12 years the district averaged a 1.2% levy. Simultaneously, the district transferred money from the fund balance into the budget to achieve capital upgrades. Our community is informed of how the district spends the surplus and has supported our budget every year with over 70% approval.”
Mineola’s current annual budget passed in May’s balloting by a vote of 718 to 210.
The comptroller is not empowered to penalize districts for misconduct but can refer possible criminal offenses to prosecutors for action. The district is not accused of any criminal or civil wrongdoing.
Across Long Island, school budget surpluses have emerged as a hot-button issue, with some business leaders calling for stricter curbs on cash balances. Mineola is the latest of more than 30 districts in the region flagged by the Comptroller’s Office for collecting what it describes as excessive reserves.
Many education officials contend, on the other hand, that the amount of unrestricted cash reserves allowed districts under state law — equivalent to 4% of total budgets — is too small and should be expanded. Some fiscal experts have recommended reserve allowances of more than 15%.
A series of comptroller’s reports have detailed instances in which districts pad budgets by overestimating expenses or listing employee positions they do not intend to fill. Mineola’s audit highlights seven areas where the district overstated the amount of money needed over four years — for example, an overage of $4.76 million for students with disabilities, $2.59 million for regular teaching, and $3.69 million for hospital, medical and dental insurance.
Auditors noted that Mineola’s cash surpluses remained high, even with the onset of the pandemic in March 2020. During the months that followed, many school systems publicized what they described as the need to spend extra money as a means of lowering class sizes and taking other precautions against infection.
Mineola ended that fiscal year with an operating surplus of more than $6.9 million, compared with $4.9 million the year before, auditors reported. Over the entire four years reviewed, the district’s unrestricted reserves known as fund balances ranged from 6.2% to 9.3% annually — well over the state’s 4% legal limit.
“District officials are withholding funds from productive use, which results in real property tax levies that are higher than necessary,” auditors concluded.
Nagler, on the other hand, described the district’s approach as a prudent one, which included a “painful” decision in 2010 to close two elementary schools. The schools chief added that savings from that move were used to “maintain a stable tax levy that avoids spikes.”