Auditor gives Vernon schools mixed reviews

The Vernon Township School District got mixed reviews from its auditor on Oct. 21, as the district navigates through six years of state aid cuts. But the auditor said he feels better about where the district is now than he would have been a year ago.

Ray Sarinelli Jr. of Nisivoccia LLP said the district plans to balance the budget by using its surplus, the money left over from a previous year’s budget after all of its line items are paid for.

The district lost about a half-million dollars last year and $2 million the year before that.

“To say you’re not in a difficult position would be the biggest lie of all time,” Sarinelli said.

He said he is still concerned about where this all ends up, but believes the district benefited from the school closures that started in March 2020, at the outset of the Covid-19 pandemic. Without that respite, he said, the district’s fund balance would now be at an all-time low.

“As an accountant, I want to see consistency,” Sarinelli said. “There is nothing more inconsistent than huge reductions in revenues compounded by the fact that we’re in a pandemic that nobody’s ever dealt with before.”

Capital reserve is low but building back up

Sarinelli said district has nearly $11.1 million in its fund balance, but split into four different categories. Most of that money is not easily accessible to the district, he said.

The district has an unassigned fund balance of $2.75 million, about 4 percent of its $67 million budget.

“That number is significantly lower because the state has allowed unassigned fund balance with no stipulations,” Sarinelli said. “The regular fund balance is there for cash flow purposes to make sure you don’t run out of money. It used to be 2 percent of expenditures. Now it’s 4 percent.”

In 2020-21, the school district started with a $6.4 million fund balance, which rose to $11.1 million at the end of the year. Sarinelli said the state allows the district to break the balance down into several categories.

One category, which held about $284,000, was for expenses that were already in the budget but had not yet been paid. Another category, which held about $242,000, was in reserve for unemployment benefits, a new standard.

The district has a $2,470 maintenance reserve account. Sarinelli said it’s difficult to get money out of there. If the district has a good year, he said, the school board can decide to put money in there.

Sarinelli said he was concerned about the district’s capital reserve being so low, but that he is less concerned after the district added about $4.1 million to the reserve.

After allotting the $2.75 million unassigned fund balance, the district had a surplus of $2.9 million for 2021-22 generated after the 2019-20 school year. The district generated a $715,000 surplus after 2020-21 for use in 2022-23.

The excess money must be used in the following year’s budget.

“It’s always in the next succeeding year because your budget is done in February,” Sarinelli said. “We didn’t know what the excess surplus was until June.”

Board of education president Justin Annunziata said any insinuation that the district is holding onto that would be a “false insinuation.”

“It’s not like you can take that $11 million and say you’re going to spend it on whatever you want,” Sarinelli said. “There is now a way to access your unassigned fund balance without some steps being taken from the state and county superintendent.”