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Starpoint blasts overtaxation audit

PENDLETON – Starpoint Central this week became the second Niagara County school district this year to be accused in a state audit of overtaxing its residents, but the district isn’t taking the accusation lying down.

In a blistering response letter to the State Comptroller’s Office, Superintendent C. Douglas Whelan, who is leaving office in June, saw no need to mince words. He told the auditors Tuesday that their accusations against the district are “blatantly false” or “egregiously false” and that Starpoint has run a tight financial ship.

The audit accused the district of overestimating expenditures and then, when it didn’t spend all the money that it appropriated, of stashing it in surpluses or reserve funds, which the auditors said are larger than state guidelines.

It was a audit similar to one issued last month against the Royalton-Hartland Central School District, whose surpluses are far above the level allowed in state law – 4 percent of the ensuing year’s spending.

The audit accused Starpoint of appropriating $1.9 million in surplus funds in each year’s budget to make it look as it were under the 4 percent limit, but 99 percent of that money wasn’t spent, so the district’s true surplus level is about 8 percent of the budget.

From 2010-11 through this year, the Starpoint tax levy rose by 17 percent, while it accumulated more than $3.1 million in operating surpluses.

The audit said Starpoint builds up money for unanticipated expenses, appropriates reserves and adopts conservative budgets – all good things. But, the report added, “doing all three of these – and continuing to do them as fund balances and reserves are growing – is an unnecessary burden on taxpayers.”

“We say to them, ‘You’re doing the same thing at the state pension fund,’ ” said Jonathan R. Andrews, director of administrative services.

The first draft of the audit called Starpoint’s practices “unfair to taxpayers,” and Whelan called that “blatantly false,” after which the state toned down its language. Whelan said Starpoint is “the most cost-effective school district in Niagara County, with an average full-value tax rate increase over the last 13 years of 1.08 percent, while reducing the equivalent of 30 full-time jobs trough attrition since 2008-09, refinancing debt and pushing utility bills down to a level lower than it was before the district built a new high school 13 years ago.

Whelan wrote that the state owes Starpoint $40 million in aid reductions. “Without conservative budgeting, Starpoint would have had to lay off staff and reduce programs to such a level that the district would not have been able to provide an acceptable level of education to its students and community,” the superintendent wrote.

“It’s frustrating, because we feel we are budgeting appropriately,” Andrews said. “We feel we have done a great job in minimizing costs across the board in every area of the district.”

A spokesman for the comptroller’s office said, “They aren’t legally allowed to have more than 4 percent in their fund balance. That’s not our decision. But we certainly note when a district has over that amount and is not putting the funds to productive use. If they are accumulating excessive funds, it stands to reason that taxpayers don’t need to be paying as much.”