West Islip SD posts $5.4MM Surplus for year ending June 30, 2021

The West Islip School District’s annual report for the year ended June 30, 2021 includes a general fund surplus in the amount of $5.4MM. The surplus was solely used to increase reserves from $32.1MM to $37.6MM and as a result no portion of the surplus will be used to reduce the tax levy. Over the past four years the district has generated surpluses totaling $18.6MM that were also used solely to increase reserves. Examples of some of the general fund reserves include retirement contributions ($11.3MM), employee benefits ($8.4MM), capital ($6.0MM), workman’s compensation ($3.0MM), and unemployment insurance ($1.5MM). Keep in mind that these reserves are over and above what is expensed in the normal budget process. The unassigned reserve, as its name implies, is not restricted to any one purpose and can be used for such things as a large unexpected expenditure or a significant revenue shortfall such as a reduction in state aid. The unassigned reserve amount of $5.1MM is limited to 4% of next year’s budget amount and the district takes advantage of reserving this to the maximum amount.

A look at some of the financial highlights during the 2020/2021 school year that contributed to the $5.4MM surplus include the following:

• Revenue recognition of an unbudgeted federal grant in the amount of $0.2MM related to Coronavirus Aid (CARES Act).
• Higher refunds from BOCES and Suffolk Transportation of $0.2MM and $0.3MM in part due to the Covid 19 lockdown.
• Lower special education costs than budgeted in the amount of $1.9MM due to fewer students placed out of district.
• Lower employee benefits in the amount of $1.4MM primarily due to lower retirement costs of $0.8MM and health insurance costs of $0.4MM.

It’s worth noting that neither the Finance Committee update, the Audit Committee update nor the Business Office update mentioned the $5.4MM surplus at last week's BOE meeting. In addition when asked to explain why any portion of the $18.6MM in surpluses wasn't applied to reduce school taxes, BOE President Anthony Tussie admitted he wasn’t comfortable discussing the topic and had the Assistant Superintendent for Business respond in his place. Tussie’s admission is rather surprising since he serves as the district’s Chief Fiscal Officer and that the authority to set reserves rests with board members who are expected to understand this topic. The district's justification for applying surpluses solely to reserves is that the reserves are "rainy day" funds to be used against unforeseen events that would have a significant negative impact on the district's financial condition. However if the BOE instead elected to retain half of the $18.6MM surplus amount in reserves and reduced the tax levy by the remaining $9.3MM, residents would have realized a one time estimated school tax savings of 10.7%. To illustrate this a taxpayer with a home assessed by the Town at $45,000, which translates to a full market amount of $417,827, would realize an estimated school tax savings of $814. Residents with assessed values higher than $45,000 would realize a savings greater than $814. Unfortunately for residents, there is clearly no appetite for the BOE to provide any tax benefit to homeowners for overpaying their taxes.

Note: Sources for the information used in this article include the district's annual report, the district's business office, the Office of the New York State Comptroller and the Town of Islip Tax Receiver's office.