001Good evening. Today is Monday, May 4th, 2020. This is a special meeting of the Newburgh Enlarged City School District. Before we get going, our live stream is not working. However, the meeting is being recorded in its entirety. We have >> Roll call next. Ms. Christine Bellair? >> Here. >> Ms. Thomasina Bellair? Ms. Bouchey? Mr. Berlingieri? >> Present. >> Ms. Burke? >> Here. >> Mr. Galligan? >> Present. >> Mr. Howard? >> Present. >> Mr. Lennon-Steele? >> Here. >> Ms. Palladino? Mr. Arcenaux? >> Here. >> Thank you. We have one item on the agenda tonight. Two items. Um first is a presentation by Ms. Orsini on the response to the controller's New York State report. >> Thank you, Mr. President. >> I just have a question as since it's not being broadcast live, is there a um
002is that written people will look into it that they understand that it is being recorded and will be posted? Is there Is there something up there now so they don't get disappointed? Uh well, just a a statement saying that it will be up? That it's being recorded and it will be put up when the recording is finished. Dr. Sparks? >> Yes. >> Thank you. Thank you, Ms. Orsini. >> Thank you. So, tonight we're going to review the proposed corrective action plan from the State Comptroller's audit, which was issued at the beginning of February in 2016. Next slide, please. So, school districts in New York State undergo a number of audits, and there are many annual audit requirements. We undergo the following audits. The external audit is a financial audit that's done every year. It begins
003as soon as the year closes, and we have a final report issued and approved by the board no later than October 15th. The risk assessment is also considered the internal audit, and this is a procedural audit that looks at processes and procedures around the district. It is not exclusive to finances. This is also done annually. With that, a special area is identified by the board to dive in deeper. This year's special area selected by the audit committee was employee benefits. We also undergo a single audit every year. This is specific to grant funds and ensures that the district remains compliant with federal regulations around how those funds are spent. We have a claims auditor, and she reviews every single claim before payment is processed. If she does not approve that payment, it may not be
004made. Then we have the regulatory audit, which is the state comptroller's office. They often audit periodically, uh and they audit all public entities across the state. They identify the area of focus, and this time around, that was uh financial management. They also look at district tax cap populations and management of the employee retirement system, which they oversee. Next slide, please. So, the Division of Local Government and School Accountability conducts these audits of local governments, special districts, public authorities, BOCES, charter schools, and school districts across the state on a variety of areas, such as information technology, payroll and benefits, financial management, purchasing and procurement, claims auditing, records, inventory, capital projects, and more. These periodic audits are generally done by every 5 years, but COVID impacted their audit cycle. Next slide, please. The purpose of an audit
005by the state comptroller is to ensure state and local governments use taxpayer money efficiently, effectively, and transparently. These audits aim to improve operations, strengthen internal controls, promote public accountability, and reduce costs. It is routine for public facing organizations across New York State to be audited. For example, the Union Endicott was audited by the State Controller's office six times between 2019 and 2024. Each of these were budgetary reviews. Next slide, please. The last audit for Union-Endicott was issued in June of 2019. That was a financial management and information technology audit. This time they did a financial management audit, which is the broadest scope. The audit period is for July 2019 to June 2024. It's a 5-year period. The report identified three findings with several recommendations. So, the timeline for this audit. The entry meeting was in
006May of 2024, and their auditors began their work on site from May 2024 through November 2024, gathering information, data, performing testing on financial information, and reviewing personnel files and human resources. While on site, they also performed a periodic audit of the local employees' retirement system. Next slide, please. The draft report was issued in November of 2025. The district's response was prepared and is to be submitted within 30 days. The exit conference is scheduled for December 2025. Our final report was issued February 2026. The district must provide a corrective action plan, filed with the State Controller's office within 90 days of receiving that report. Next slide, please. The corrective action plan is required if an audit report has findings and or recommendations, and it must include what corrective actions have already occurred or are planned, who's
007responsible, and the implementation date. The governing body or the Board of Education must approve this corrective action plan before it event in the State Comptroller's Office. Next slide, please. Finding one, board and district officials did not develop and adopt realistic budget or effectively manage fund balance between July 2019 to June 2024. There's several notes we want to include in here so that there's a better understanding of that time period. During this time, the district had three superintendents and five business officials. During this time, the district also received a significant amount of federal one-time funds, and New York State decided to implement a school funding foundation aid. Additionally, in standard operating procedures for the business office functions were developed in the 2022-2023 fiscal year by current district leadership. These are still used to direct the work
008and how it's done for both consistency and compliance. Recommendation one is develop and adopt budgets that include reasonable expenditures and revenue estimates. The response to this one is that no action is required. The Board of Education hired an independent consultant to review the fund budget and revenue in 2025. They evaluated budget and revenue estimates, as well as how those were arrived at. The budget consultant agreed with the approach to the estimates and considered those made for fiscal 2026 reasonable and appropriate. The budget consultant reviewed the budget development process as well and did not recommend any changes to the current process. Next slide. Recommendation two to develop and adopt a plan to reduce the surplus fund balance to comply with statutory limit in real property tax law. They identified four possible uses of funds: one-time expenditures,
009needed reserves, paying off district debt, or reducing property taxes. It's very important to know and understand that districts may not issue refunds to taxpayers. Surplus funds are used as a revenue source to reduce tax increases as you go forward. Our response to this recommendation is no action is required, but the intention is excess unassigned fund balance that was identified and shared publicly with the board and the community on January 28th, 2025. These funds were used as revenue in the 25-26 budget. We are currently within the 4% limit. Additionally, the Board of Education annually approves funding of the reserves through a board resolution at a public meeting. This establishes funding limits for the listed reserves, and those have not been exceeded by current district leadership. Additionally, in each of the past 3 years, fiscal 24, 25,
010and 26, two of those years outside of the audit period, surplus funds were used to pay down debt. Surplus funds were utilized to pay some of our bank principal to reduce our long-term debt expense, which is one of the areas identified by the state controller. Additionally, we have used those funds for one-time purchases, including climate control for the district data processing, which was identified as a priority. We've also used it for security upgrades, roof repairs, replacements, and emergency electrical work. Next slide. Finding two, reserves were not always funded as part of the budget process or lacked proper documentation. Next slide. Recommendation three, to fund the reserves transparently by including anticipated funding of reserves in the annual operating budget rather than through year-end transfers of operating surplus. Our response to this is no action is required.
011This recommendation does not align with budget development processes in most school districts or public entities. The district does not build in surplus funds to its annual operating budget to fund reserves at the end of the year. Reserves are funded when surplus funds exist at the end of the year. And we shared in the April 7th board meeting in our presentation that those often result from unfilled positions, salaries, and benefits associated therewith. Next slide. Recommendation four, review and update the fund balance and reserve fund policy to include all reserves held by the district and clarify optimal funding levels. Our response here is that this is complete. The policy for reserve funds was updated in May of 2023, but was only approved by the policy committee at that time. The Board of Education has adopted an updated
012policy on April 21st, 2026. Recommendation five, review all reserve fund balances to determine whether amounts reserved are necessary and reasonable, and reduce overfunded reserves. Our response to this is that a review will be conducted by the assistant superintendent for finance and our district treasurer in consultation with the district's external auditor and the board on current funding levels and possible reductions. Any such recommendations will be brought forward to the board for their consideration as to whether or not they should be reduced. We do want to note, once again, that as part of our budget development process, we provide a multi-year plan for how the use of reserve funds will occur as part of our operating revenue. Next slide. Recommendation six is that to ensure that budget transfers are approved by the board for all transfers into
013the reserve funds. Our response here again is no action is required. This has been a consistent district practice since January 2022, and we identify the date for each fiscal year that the board adopted such resolutions. And again, the amounts established in these resolutions have not been exceeded. Additionally, we wanted to note that in fiscal year 2015, the board also approved a reserve fund resolution, and those limits were not received in the report. Finding three, the board did not develop a written multi-year financial plan or a comprehensive capital plan that addressed capital needs. Recommendation seven, the board and district officials should develop and adopt and periodically update a written multi-year financial plan and comprehensive capital plan to be used in conjunction with the district's annual budget development process. Recommendation seven our response is that the district
014agrees with this recommendation. The board and district officials recognize the importance of long-term financial capital planning which is essential to informed decision making. The district leadership has engaged in long-range financial forecasting and shares that information during the budget development process. Each year the board is communicated This also again highlights our plan-based reserve balances as well as our cash. Additionally, every five years in compliance with the SED regulation, the district undergoes what is referred to as a facilities condition survey. This is a comprehensive review of each building including the site, exterior facade and building envelope, the interior, mechanical, electrical, and other systems within the building as well as furnishings. The resulting report includes cost estimates for recommended work and there's a prioritization process that occurs with those that report survey before it's filed with SED to
015identify those items that might be in a future capital plan. Typically, priority ones and perhaps priority twos depending on the funding levels are adapted into the capital plan. Ours is due to be filed in February of 2027, so we will begin that building condition survey process shortly. Um we know that it's going to identify some needs in our buildings in our building envelopes and our interiors and some of our systems. So we are looking forward to that comprehensive report to help inform future improvements in our schools for our students and our community. Next steps, the board will need to vote to approve the corrective action plan and distributorship will submit this to state comptroller's office. >> Thank you, Ms. Jordan. Questions from the board? >> Excuse me. I have two things just I'd like to
016add about firstly the board approved a budget to bring to the voters sometime in April, correct? And in in that in that was a dollar amount that we believe the state is going to be giving us for to to run this district. So now the voters are going to vote for this in two weeks. Has the state completed their budget and told us exactly what it's going to be? >> No. There is still not a first state budget by the legislature. So that process is still ongoing so we do not have a final number. >> Okay, so we we meaning the voters are voting on something that we believe to be correct. And listen, I hope it's wrong and they give a lot more money to the schools. I don't know if that's going to
017happen or not but let's assume that it is. So we don't know exactly how much money will be given in the last Okay, so I just wanted to bring that point up and it seems that more often than not we don't have an accurate figure by the time the board votes on it at least and then also when the public votes on it. >> So it has become a little bit more frequent where we have not had a final state budget by the time the board votes with our current governor. However, last year they adopted around May 8th so we did have final numbers before the voters acted. What the voters are approving is the tax levy and the amount not to exceed. So if we were to get additional revenue that they approved our
018tax on a budget, it just means that we would use certain sources to cover those expenses or the board would have to vote to amend the budget. >> So, if they do decide to give more money, which sometimes, more often than not I think they do, that becomes a surplus in our figure, correct? Because we didn't figure we were getting that much money. >> It could. It could. I All right. So, my next question is also in in regards to the next step. Um you said that we are going to vote tonight. We're going to submit it. Does the state have any step after? Do they approve our um corrective action plan? Do they not approve it? Do they put it in a file? Do they wait for next year and say, "Hey, did you
019do Did you do what you said you was going to you were going to do?" >> There is no cycle of follow-up on these regulatory audits, but they are published and we are required to submit the corrective action plan and that would be exactly the way it all would be publicly available. >> Okay, but it's not It's not um It's not followed up. It's not um >> They're not going to come back and check and say, "Well, did you do?" >> Thank you, Mr. Howard and Mr. Bell. >> Thank you. Thank you, Mr. President. So, Mr. Warren, uh for the education of of a lot of people that are going to be listening to this and what I've been hit with throughout the community, in layman's terms, can you please explain what a reserve fund
020is? What a reserve fund is used for? What is the expectation of a reserve fund in a district of this size? And what unexpected expenses can be used with a reserve fund? >> So, I'm going to speak in general terms because we know that reserve funds are designated for specific purposes, correct? So, we have a workers' comp reserve, for example, that we use as a revenue source to offset that expense in our budget rather than increase taxes. Um we also have an unemployment reserve that we similarly use to cover those expenses rather than tax for that expense. I think the ones that most people are closely familiar with are capital reserves um because those are reserves that are designated for capital improvements in the future. And we have to ask the voters to approve the
021use of those two reserves. So, the state comptroller's office has stipulated that it is prudent and fiscally appropriate to have savings accounts. And essentially, what we have is restricted savings accounts. And then we have the unassigned fund balance, which we can use for general purposes. You will notice that we have used those in the last few budgets as a source of revenue. It was proposed to use again this year. We always plan that out for future years. Um we do not assume that we're going to be able to to fund those um at the end of each year because in a perfect world, once if we hired all the staff we wanted to have for our students, and all the other costs came in as intended or planned based on what we know now, we
022wouldn't have a surplus. So, it really is the anomalies in that planning and projections that are more than a year in advance of what those expenditures are that drives whether or not we have the ability to save. So, reserves are a savings account for the district to be used for specific items as designated by that reserve. >> And you And can you speak to the idea that's gone throughout the community that they should be getting or we should be getting a tax refund based on what happened last year. Can you speak to that and and talk about why that's not happening and explain it in layman's terms to the public why it's not happening. >> So, if we could go back to slide 11 on the presentation, that'd be helpful. >> So, while this recommendation
023from the State Controller's office does itemize four ways in which they suggest we use surplus funds, one is for those one-time expenditures, which we've done. Um it's also funding needed reserves, which we've done, and paying off debt, which I want to note again is one of the best things that I think we can do because that saves us future expense. So, if I reduce our debt service expense in future year budgets by paying that off, that means there's more dollars in those budgets to go towards our programs and supports for kids. So, it is one of the best ways that we can use surplus funds. The last way that they suggest is reducing district property taxes. Again, the district may not issue a tax refund check. There's no mechanism in law that allows us to
024issue a tax refund. What we do is we use those surplus funds towards the next year's budget, offsetting for not having any tax increase as a result of that. And while we did increase taxes in fiscal year 24-25, we haven't done it in 26 and it's not proposed for 27. >> So, last question. So, I'm just curious, has your recommended to your knowledge and in the district you work in in being in that area of expertise, has that been done anywhere in New York State? >> Zero tax levies? >> No, no. Where refunds were given out. >> No, because there's no statutory mechanism to do that. We don't >> Okay. Okay. >> Why is it on the cap that so many when in the in the column that says person responsible for implementation, why is
025that left blank in so many areas? >> Because there's no action required, so there wouldn't be anyone responsible for it. It's already addressed in our current procedures. >> Okay, so if you if you say there's no action required, does that mean that you disagree with the controller's findings? >> Uh we explained that response each time and we noted in many cases that it was already resolved, so there was no action required. >> Okay. And um I believe it was uh Ramapo that actually did issue a refund to taxpayers in one year or another. But anyway >> So East Ramapo has a very different construct. They're under a fiscal oversight by the state. So they have different rules of engagement there in terms of how they do a number of things. But it including procurement. >>
026But it could be done. >> Districts in general do not have statutory mechanism by which they issue a refund. >> Well, why would the uh state controller make a recommendation that we couldn't do, couldn't fulfill? >> They're making a recommendation that you reduce taxes, not that you issue a refund. And we did do that. We used the surplus funds to not have a tax levy increase in future years. So we have done that recommendation. >> Okay, and finally, if if the state controller's audit auditors reject this corrective action plan, are there consequences for the district? >> The board approves the corrective action plan and submits it to the state controller's office. They either approve or reject. >> They either approve or reject? >> No. >> Okay. Thank you. >> Mr. Ferrugiaro, thank you. Thank you,
027Mr. Ferrugiaro. Um The last time the building uh condition survey was done that would be like during covid. Was there a delay of that survey because of covid? >> It all worked as a pushback. >> So they actually changed the regulations during that period of time and they used to have visual inspections on a cycle and then the full building condition survey and they changed the schedule across the state and issued a new five-year cycle for all districts. So we are on schedule at this time. >> Okay and last question on that in regard to that. Are there any Are there any issues or projects that we haven't started yet that are from that building condition survey from last time? >> So what I would tell you is that there were some items that were
028identified for the capital bond in 2019 that we have not done. That's something that we've talked with the board about in the past based on cost escalation and other factors. There are some things that may come out of may not be able to be done. But what we know from the new building condition survey is it's a current snapshot in time and that really is the thing that will inform our future capital works because it gives us a comprehensive review of the current state of our buildings reflecting work that has been done as part of capital, work that's been done as as part of our operating budget because it was essential and where we really need to go from here. >> Okay so you're saying we're not going to see any of those things that
029were found back then or still kind of in the air? >> So this becomes our new snapshot that really guides us. So we're not looking backwards, we're using this to look forward. >> Okay, thank you. >> Any other discussion on 21? All right, we'll move to 22. Resolution to approve corrective action plan in response to the New York State Comptroller's report. I'll read it. Be it resolved that the Board of Education of the New York Enlarged City School District hereby approves the corrective action plan in response to the New York State Office of the State Comptroller financial management report issued February of 2026. Second a motion and second. >> So moved. Second. >> Thank you. Further discussion. Mr. Berbarelli? >> Yes. >> Ms. Burke? >> Yes. >> Mr. Durey? >> Yes. >> Mr. Howard? >>
030Yes. >> Mr. Levenstein? >> Yes. >> Ms. Christine Bello? >> No. >> That motion passes. Thank you, sir. Got a motion to adjourn the meeting. >> So moved. >> Second. >> Thank you. Ms. Burke? >> Yes. >> Mr. Durey? >> Yes. >> Mr. Howard? >> Yes. >> Mr. Levenstein? >> Yes. >> Ms. Christine Bello? >> Yes. >> Mr. Berbarelli? >> Yes. >> Thank you.