State Comptroller Thomas P. DiNapoli's office identified $880 million in excess funds tied up in reserve accounts, missed cost savings and questionable payments by school districts, according to a report DiNapoli released entitled "Making the Grade: Five Years of School District Accountability." 733 audits encompass all of the state's public schools and BOCES from August 2005 through February 2010: completed before a March 31st deadline.

The audits were triggered by a February 2005 report that detailed how officials at Long Island's Roslyn Union Free School District helped themselves to more than 11-million dollars.

"Taxpayers have the right to know if the school districts are managing their money the right way and we found a majority are trying to do this," DiNapoli said. "Our audits have increased transparency by giving taxpayers an objective look into school district finances. We're holding school officials accountable. And we've protected taxpayers' money.

"Over the last five years, my auditors identified $615 million that districts unnecessarily set aside at taxpayers' expense. That's money that could have been used to lower property taxes. Now more than ever, every dime counts. Our audits are helping protect those dimes for taxpayers."

DiNapoli's auditors found 285 school districts and BOCES across the state improperly retained a total of $615 million in taxpayer money in various reserve accounts, with the majority of the money held in employee benefit accrued liability reserves (EBALR). This total reflects the amount of money in the reserve funds that exceeded reasonable estimates of the districts' anticipated liabilities for the reserve funds.

DiNapoli also identified several opportunities for legislation that could increase transparency and accountability in school district finances and assist districts with long-term financial planning. These legislative proposals would provide taxpayers with more information on how school districts spend taxpayer money.

DiNapoli's proposed legislation would;

Require boards of education to authorize an increase in funding of reserve funds;

Require school districts to include a schedule of all reserve funds in the districts' public budget notices;

Enable school districts to create a tax stabilization fund to help mitigate tax increases greater than 2.5 percent of the tax levy;

Grant authority to school districts to set aside money to fund future retiree healthcare costs by establishing other post-employment benefits (OPEB) trusts;

Allow school districts to transfer excess EBALR funds to the operating fund or to an OPEB trust;

and Allow school districts to establish reserve funds to pay for Teachers' Retirement System employer costs.

DiNapoli promised his office will continue to rigorously audit school districts. Transportation, purchasing, shared services opportunities, energy savings, special education and school Medicaid reimbursement will be scrutinized. Auditors will also review school districts' controls over information technology specifically assessing districts' computers' vulnerabilities to unauthorized access.

Read the Comptroller's report [PDF].