(Photo Source: Marathon Central School District Website).
A report last month from New York Comptroller Thomas DiNapoli designated Marathon Central School District (MCSD) as “susceptible to fiscal stress,” but a school business official says that the district’s finances are in healthy condition.
MCSD was one of 23 school districts statewide flagged by the comptroller’s office as having some level of fiscal stress, according to DiNapoli’s fiscal stress monitoring system. The comptroller’s designation is based on the district’s financial status during the 2020-2021 school year.
“Fewer of New York’s school districts were scored as under fiscal stress in 2021, but the operational issues caused by the pandemic for all school districts were extreme,” DiNapoli said in a statement. “School districts must watch their finances closely as the pandemic continues, prices rise and staffing issues mount.”
School districts are given a fiscal stress score based on several factors: year-end fund balance, operating deficits and surpluses, cash position, and reliance on short-term debt for cash-flow, according to DiNapoli’s office. Marathon’s score was 26.7, which is relatively mild when compared to the highest fiscal stress numbers found at East Ramapo Central School District in Rockland County (76.7 points) and Newfield Central School District in Tompkins County (66.7 points).
MCSD business official Tom Goskoski said the stress test score was assessed for the last three years due to the district’s “gross expenditures have exceeded gross revenues.”
“We have been utilizing our reserves to make up the difference between our expenditures and revenues in order to reduce the appropriate reserves,” Goskoski said. “However, according to the stress test that makes us ‘susceptible to stress.’”
The district was audited by DiNapoli’s office in 2017, which yielded the recommendation to expand the use of reserve accounts.
“In their final report the office suggested that three of the district’s reserves were over-funded,” Goskoski said. “We developed a plan to reduce the reserves and have been doing so for the past four budget cycles.”
The accounts mentioned by the comptroller’s office are employee retirement contribution reserve, the employee benefit accrued liability reserve, and the debt service fund. Below is a comparison of where the accounts stood at the end of the 2017 and 2021 fiscal year end (FYE).
(Graphic Source: NYS Comptroller’s Report).
“We continue to update our reserve plan annually and will continue to utilize our reserves in a methodical and prudent nature to benefit the taxpayers of the district,” Goskoski said.
Goskoski called the situation a “double-edged sword.” He noted the district is being flagged for having too much money accrued in their reserve accounts. When they try to use it to bridge their financial shortfall, they are then flagged for financial stress.
“I am not trying to invalidate the comptroller’s office’s financial stress test,” Goskoski said. “It just doesn’t coincide with what we are trying to do in reducing our reserves when they indicated these accounts were (overfunded).”
Some of the district’s expenditures that increase significantly year over year are salaries and health insurance costs, he added.
Goskoski noted that overall the district’s finances are in “good shape.”
“We haven’t had any downgrade to our credit ratings. We are still very financially healthy,” Goskoski said. He added that incoming federal funds will help shore up any potential financial difficulties. “We will be even healthier in the next few years. We won’t have any expenditure overage in this upcoming year at the end of the fiscal year.”
