Poor financial practices by the East Ramapo Central School District, including inaccurate budget estimates, have left the district with operating deficits for the past two years and could jeopardize future district operations, according to an audit released Friday by State Comptroller Thomas P. DiNapoli.

“Sound budgeting practices ensure that a school district can fund operations and address unexpected expenses,” DiNapoli said. ”East Ramapo School District must do a better job to keep its finances in order to avoid deficits and fiscal uncertainty. School district officials have an obligation to students and taxpayers to accurately reflect the district’s financial condition and make any necessary adjustments to stay on track.” 

DiNapoli’s auditors examined the district’s finances from July 1, 2009 to Feb. 1, 2013, but the audit included a projection of the district’s operating results through June 30, 2013, or the end of the school district’s fiscal year.

Auditors found that the district estimated a $7.4 million deficit for the 2012-2013 school year and issued a budget note to cover the deficit. After examining financial records, auditors estimated the actual deficit to be $8.2 million, which is $800,000 more than the school district borrowed to cover the deficit. Furthermore, district officials planned to use the proceeds from a property sale to pay off the borrowing, but the sale was delayed. Unless these budgetary and cash flow problems are addressed, future district operations could be adversely affected.

Auditors also found that the district’s unassigned fund balance, the difference between revenues and expenditures accumulated over time, had a deficit of $1.3 million as of June 30, 2012. Fund balance allows school districts to manage unexpected occurrences such as emergency repairs, cost and fluctuations in essential commodity costs and unanticipated shortfalls in estimated revenues. With no fund balance, the school district’s ability to manage its finances could be at risk. 

Additional audit findings include:
·        An inclusion of $5 million as revenue for a pending sale of the Colton school building in the 2013-2014 budget, even though it is unclear whether that amount will be realized;
·        An overestimation of Medicaid costs by $2.1 million when prior revenues should have indicated to the district a more accurate estimation; and
·        An underestimation of state aid by $4.2 million when previous aid should have indicated to the district a more accurate number.

DiNapoli recommended: 
·        School district officials ensure  their financial records are revised to reflect a true balance deficit for 2013; 
·        Develop a plan to address additional unanticipated shortfall for 2013;
·        Develop reasonable revenue and expenditures estimates and reduce reliance on one-time revenues to finance recurring expenditures;
·        Retain a reasonable amount of fund balance to address unanticipated needs to provide necessary cash flow for operations; and
·        Monitor and adjust budgeted revenues and expenditures to avoid operating deficits.

School district officials generally agreed with the report’s findings and have begun to implement many of its recommendations. The district’s responses to the recommendations are included in the report.

For a copy of the Financial Condition of East Ramapo Central School District, visit:



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