Groton, N.Y. — The Groton Central School District should not have raised its tax levy by $509,000 over four years, the New York State Comptroller’s Office said in an audit released on Friday.

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“The Board and District officials are not developing budgets that provide realistic financial plans or effectively managing the District’s fund balance,” the audit states.

Over the course of three years, ending June 2014, the district had a $2.6 million fund balance, but “due to unrealistic appropriation estimates … did not use any of this appropriated fund balance,” the report concludes.

Superintendent James Abrams resigned at a meeting a few days before the audit was released. The Ithaca Journal reported that the meeting lasted a total of 92 seconds; that no reason had been given for Abrams’ resignation; and that he would receive an “undisclosed severance payment, as well as retiree benefits.”

The Voice has not been able to reach the former superintendent, who was also criticized by some parents for his handling of a recent football hazing case.

While directing comment to the superintendent and school district officials, BOCES Superintendent Jeffrey Matteson said in an interview on Tuesday that he did not think the audit was related to the resignation.

He also defended Groton school officials’ handling of the finance; said several other local school districts were in the same place; and criticized the comptroller’s audit.

“I believe it was a reaction to the financial situation from a few years ago,” he said of why Groton would have excess funding reserves.

A page from the state comptroller's office.
A page from the state comptroller’s office.

Key findings, recommendations

The audit says that school districts are only allowed to have a maximum of 4 percent of the next year’s budget in an “unassigned fund balance.” However, Groton had an unassigned balance of “8 to 13 percent,” the report states.

“The Superintendent, Board President and Treasurer were all aware that the District’s unassigned fund balance exceeded the statutory maximum of 4 percent of the ensuing year’s budgeted appropriations in each of the past three years,” the report says.

“While District officials budgeted for operating deficits and the use of fund balance during our audit period, they instead had operating surpluses totaling $2.6 million for the same period.”

There were 3 key findings and 4 key recommendations in the report.

The findings were:

1 — The school’s unused “fund balance” exceeded the legal maximum.

2 — There were three reserve funds with excessive balances and no plans or policies to use those reserves.

3 — The tax levy increase of $509,000 was “unnecessary” based on the extra levels of reserve funding.

The comptroller’s recommendations to the school district were:

1 — That the school district spend money to ensure that the reserves meet legal requirements.

2 — That the excess funds be transferred somewhere they will comply with the law.

3 — That the school district develop a “formal plan” for use of the reserves.

4 — That the school district “stop raising more real property taxes than necessary.”

Response from local school officials

In a message to state officials, Superintendent Abrams denied that the school district’s funding was “excessive.”

The primary reason? “The potential for decreases in state aid,” which had already scared many other local school districts to prepare for the worst, Abrams said.

Abrams said that while the school was merely trying to pursue “extremely conservative budget practices,” it will now rethink how to spend its funding over the next few years.

“Our budgeting has become more conservative as we considered the fact that we had made such significant reductions in personnel and programs in anticipation of an even longer recession,” Abrams states.

Abrams noted that the 2014-15 school budget required a 1.87 percent tax levy increase and that this number should only continue to decrease.

“However, the recession has ingrained in us the real possibility that it may occur again, and we must be in the fiscal condition to weather that storm for sustainability,” Abrams says.

The district’s reserves are already below 10 percent of expenditures and therefore “appropriate,” according to Abrams. Abrams also said that some of the excess money has been used to pay off capital debt for bus purchases, for an aging playground and for a collapsed drainage pipe.

“We do believe that the reserves at their present level are sufficient to sustain us in the event of another recession,” his letter states.

The superintendent's response to the audit.
The superintendent’s response to the audit.

Matteson, the BOCES official, emphasized in an interview Tuesday that Groton was hardly unique in having this reaction to the recession.

He also said the school was now on its way to rectifying the problems identified by the comptroller. “I know they’re working on a plan to comply with the comptroller’s report,” he said.

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Jeff Stein is the founder and former editor of the Ithaca Voice.