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A recent audit of the Niagara-Wheatfield Central School District warned about certain trends it said could affect future budgets.

The Niagara Falls firm of Niagara Frontier Accounting Professionals warned that factors such as assessment reductions, alternative programs, transportation, tuition reimbursements and special education costs could throw an unexpected punch at taxpayers.

Business Director Kerin Dumphrey said, "They're (the auditors) saying to us to stay ahead of the curve."

The audit said the district should attempt to predict a five-year trend so that tax increases could be implemented gradually. Taxes have only increased about 3.5 percent over the past three years because the district has used $3 million from its surplus to cover expenses.

The practice of using surpluses to offset tax increases would be difficult to maintain, the audit advised.

Although "a few things happened that the board didn't anticipate," the board has been attempting to address several of the issues.

Assessment reductions are occurring all over the state, so the district is not alone in weathering the impact, the audit said.

However, the Niagara-Wheatfield reserve has decreased since 1996 to $690,000 from $1 million. A reduced assessment base would result in property-tax increases that would hit homeowners because most reductions have been on commercial properties, according to the audit.

School Board members were critical of an assessment reduction that was granted by the Town of Wheatfield in August on property owned by Bell Aerospace Textron on Niagara Falls Boulevard.

The board was not represented in the negotiation and was given three days' notice of the action.

The reduction cost the district $65,000 this year, Dumphrey said.

Revenues also would be affected by the State Tax Assessment Reduction, or STAR, program designed to ease the tax burden, primarily on elderly homeowners.

The audit noted that tax revenues usually received from homeowners in August through November would not come until January from the state.

This would hurt the district's cash flow and would reduce the interest it normally earns on excess funds, the report said.

Hidden costs in items such as early teacher retirements should be noted, according to the audit.

The auditors also advised the district to include the cost of the retirement incentive program in the budget. Spending for the current year is about $500,000. Savings don't kick in for nearly three years, Dumphrey noted.

Another cost overrun in the instructional area is the cost of hiring substitute teachers. That account went over budget by $100,000 last year, according to the report. A partial cause was the expense of disability leave, it said.

The auditors advised the board to be on the lookout for:

Increasing expenses of the alternative school program, which was not budgeted this year, but cost $350,000.

Payments to the Orleans-Niagara Board of Cooperative Educational Services for alternate programs and special education.

Transportation costs, which have increased 11 percent since last year.

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