Holley BOE president expects district will cut taxes
HOLLEY – The Board of Education president expects the school district will reduce taxes in 2014-15, in response to an audit from the State Comptroller’s Office that said Holley’s cash reserves were far too big.
“We plan on reducing them, but we haven’t discussed by how much,” said Brenda Swanger, Holley BOE president.
The district will have several budget meetings in the next two months, and she said a tax reduction will be part of the budget discussion.
She said the district is in a good situation with its fund balance, the rainy day funds a district will sometimes use to cover unexpected costs or drops in revenue.
The State Comptroller faulted Holley Central School for building up surpluses that exceeded the statutory limit by about $7 million.
“This is much better than having no money.”– Brenda Swanger on Holley’s surplus funds
The comptroller’s office reviewed the previous five fiscal years at the school district and found school leaders regularly underestimated revenues and overestimated expenditures. That created about $6.7 million in surpluses over the five years.
Swanger has been on the board for 10 years. She said Holley was in the red about a decade ago.
“This is much better than having no money,” she said today.
Holley has worked to build up its reserves, particularly to guard against swings in state aid funding, Swanger said. The district took a $1.5 million state aid hit about three years ago and faced other reductions before that.
“The state has clobbered us before with state aid cuts, and we had to lay off people,” Swanger said.
Building a surplus helps protect the district from aid reductions, she said.
“We’re trying to balance that,” Swanger said.
The statutory limit for surplus funds is 4 percent of the ensuing year’s budget or about $920,000 for Holley, which operates on a $23 million budget. The district was over the surplus fund threshold by more than $7 million or 35 percent, according to the comptroller’s report. (Click here to see the report.)
Swanger and Kathy Saville, the district’s business administrator, don’t want to reduce the surplus all the way to $920,000. That would make Holley vulnerable to big tax increases if there was an unexpected equipment failure that needed repair or if the state aid was cut.
“Four percent is on the low side, especially if a heating unit goes down,” Saville said.
The cash reserves at their current level allow the district to avoid some costs for short-term borrowing. Holley was also able to use some of the surplus to front costs for the current capital project. State reimbursements can often take months, Saville said.
With a small surplus, Saville said Holley would have to take on more short-term borrowing, which would include interest and costs for bond counsel and financial management fees.
The board will work with its administrators to develop a long-range plan for reducing the surplus. Saville just started with the district in October, replacing Gene Mahaney who retired. Swanger praised Mahaney for pushing to build Holley’s reserves over several years.
That money put Holley in a strong position for its local share of a $30 million capital project, Swanger said. The surplus could be tapped for cost over-runs or for unexpected costs.
Saville took issue with part of the news article Thursday on Orleans Hub about the audit. She said Holley didn’t move $400,000 from the general fund to a capital fund without the required voter approval, as reported in the article.
The funds were moved with the voters’ blessing, she said. However, the comptroller said the district didn’t always spend the money fast enough. Sometimes money was in the capital reserve account and not spent in a timely manner, she said.
“There wasn’t anything fiscally wrong with the district and there wasn’t a mismanagement of funds,” Saville said.