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Roy-Hart has overtaxed residents, kept surplus too large, state audit says

MIDDLEPORT – The Royalton-Hartland Central School District has been overtaxing residents for years, creating a surplus far larger than allowed by law, according to a state audit released Thursday.

The State Comptroller’s Office said Roy-Hart has been underspending its budget for years and piling up surpluses, yet the district has been raising property taxes annually, without exceeding the state tax cap.

The audit said the district should cut taxes, spend the surplus on one-time purchases or pay down its debt.

Superintendent Roger J. Klatt said Roy-Hart has been the district hit eighth-hardest in the state by the Gap Elimination Adjustment, an aid reduction imposed in 2010 that so far has cost the district $10 million. That history was one of the reasons Roy-Hart needs a big surplus, Business Administrator Kelly J. Griffith said.

Klatt’s Jan. 6 response to the audit said the district agrees with the findings and is preparing a plan to implement the recommendations.

Griffith said, “We care about our taxpayers. We certainly don’t want to overtax them. In the years before the cap, we gave money back regularly through our tax levy, but since the cap has come into play, it’s very difficult.”

The state Real Property Tax Law says a school district’s unrestricted fund balance should be no more than 4 percent of the subsequent year’s budget. As of June 30, Roy-Hart’s surplus was 18 percent, the audit says. That figure jumps to 24 percent when the amount of surplus appropriated in the budget, but not actually needed, is included.

The unrestricted surplus last year was $4.18 million, and, by law, it was supposed to be no more than $919,000.

Yet from 2012-13 through the current school year, the district has raised the tax levy by a total of $760,000, including a 2 percent increase for the current school year, which did not exceed the state’s tax cap.

The audit says that if the district had frozen tax rates at the 2010-11 level, taxpayers would have saved $2.7 million out of their pockets since then, but the district still would have a surplus that exceeds the legal limit. However, the audit showed that it would be 6.5 percent of the budget, not 18 percent.

Roy-Hart placed some fund balance in the budget each year but never had to spend it, because the district’s actual expenditures were well under the stated budget total.

The auditors wrote: “It is not a realistic budgeting practice to routinely adopt budgets that appropriate fund balance that will not be used. Further, it is misleading to taxpayers because they are under the impression that surplus funds will be used to reduce their taxes.”

The district’s budgets from 2012-13 through 2014-15 were about $22 million a year. The amounts actually spent were $19.8 million, $19.95 million and $20.8 million, respectively. The district is projected to spend $1.8 million less than it appropriated this year, with a projected surplus of 17 percent of next year’s budget.