A New York School District Padded Its Budget by $118 Million

A New York State Comptroller audit -- the state's independently elected fiscal watchdog, whose recommendations local governments and school districts are required to formally respond to -- found that the Haverstraw-Stony Point Central School District misjudged its own budgets by $118.2 million over five fiscal years.▸ The December 2025 report⧉ found the district, which operates as North Rockland Central Schools in Rockland County, routinely budgeted for more spending and less revenue than actually materialized, then moved the resulting surplus into reserve funds through transfers that never appeared in a public budget vote. The mechanism matters because a school board's budget sets the property tax levy: pad the budgeted need and taxpayers are asked to cover a gap that doesn't really exist.

On its face, the miss looks modest.▸ Comparing five years of budgeted figures to actual results, auditors found the district overestimated appropriations by $23.8 million and underestimated revenues by $22.9 million -- each about 2% a year, which the district's own written response called "an acceptable budget variance in most industry sectors." But that comparison leaves out how the district actually used the resulting cash. Add in $94.4 million the Board moved through unbudgeted year-end transfers -- money shifted into reserves and the capital projects fund after the books closed, never appearing in the budget taxpayers voted on -- and the recalculated gap between what the district told the public it needed and what it actually spent grows to $118.2 million, or 9.6% of the $1.2 billion the district budgeted over the same five years.

Of the $94.4 million in year-end transfers, $57.6 million went into the district's reserves -- funds a school board may legally set aside for specific future costs, like retirement contributions or tax-refund judgments, but which state Education Law requires the Board to expressly authorize by resolution before money moves in.▸ Auditors found $19.1 million of the transfers happened without that prior approval; the district's Treasurer told auditors she believed the transfers required only an accounting entry, not a board vote. By funding reserves through post-hoc transfers rather than in the adopted budget, the audit found, officials also made the district's surplus fund balance look smaller than it actually was in four of the five years reviewed.

By June 30, 2024, the district was holding $51.9 million across seven reserve funds.▸ Auditors reviewed each against the expenses it was meant to cover and found four went untapped even as the district kept paying the same costs out of the general fund instead: the Unemployment Insurance Reserve held $748,078 against average annual claims of $10,363 -- enough, auditors calculated, to cover 72 years of claims -- while the district paid actual unemployment costs out of the general fund instead of drawing on the reserve at all between 2019 and 2024. The State and Local Retirement System Contributions Reserve held $12.3 million against roughly $2.6 million a year in actual retirement costs, and the Teachers Retirement Contribution Reserve held $5.7 million against $8.7 million a year -- the smallest of the four relative to what it covers, at about one year's worth.

The largest of the four, the Tax Certiorari Reserve -- funded to pay refunds when property owners successfully challenge their tax assessments -- held $18.1 million against $12.6 million in outstanding claims, a $5.5 million gap.▸ Sampling 30% of claims the district actually settled in fiscal 2023-24, auditors found claims typically resolve at 22 cents on the dollar, which would put the district's real liability closer to $2.8 million. District officials told auditors the reserve's size reflects a legacy: a $224.5 million tax certiorari settlement tied to a 2007 power plant closure, still being paid down through bonds the reserve helps subsidize -- context the audit's Figure 7 unused-reserve calculation does not net out.

New York's Real Property Tax Law Section 1318 -- the statute that governs how much of a budget surplus a school district may bank rather than return to taxpayers -- caps that surplus at 4% of the following year's budget.▸ Recalculating the district's surplus fund balance year by year, auditors found it ran from 1.6% (fiscal 2020-21, the one year it fell under the cap) to as high as 12.3% (fiscal 2019-20) -- more than triple the legal limit -- and stood at 9% of the fiscal 2024-25 budget, or roughly $25.1 million, as of the most recent year reviewed. As of June 2024, reserves the district never drew from -- $36.9 million -- equaled about 13.5% of the district's entire annual budget, money the audit found was neither funded transparently through the budget process nor tapped for the purposes it was set aside for.

In a written response included in the report, district officials said the review "resulted in NO findings of operational improprieties, fraud, waste or abuse," and argued the audit judged normal budgeting -- which must account for contingencies that don't always materialize, like enrollment shifts and grant timing -- against a standard of precision the Comptroller's own team could not define when asked at the exit meeting.▸ Officials also said that by not raising the tax levy for five straight years after cutting it $1 million in 2020-21, the district left approximately $51.5 million in taxpayers' pockets over the same period the audit reviewed -- money the audit's fund-balance findings do not weigh against the levy decisions the district says it made because of the surplus.

The report lists eight recommendations -- adopt realistic budgets, write a fund-balance policy, bring surplus down to the statutory limit, fund reserves through the budget instead of year-end transfers, write a reserve policy, right-size or discontinue the overfunded reserves, require Board approval for every reserve transfer, and build a written multiyear financial and capital plan.▸ Under New York General Municipal Law Section 35⧉, the Board owes OSC a written Corrective Action Plan within 90 days of the report -- addressing each finding and posted on the district's own website for public review. The report was issued December 5, 2025; the response, and whether the district implements the eight recommendations, is not yet public record.