Port Jervis administration responds to Office of the State Comptroller audit; board discusses reserves, fund balance and fiscal strategy

Port Jervis Central School District business officials reviewed the Office of the State Comptroller’s (OSC) audit report and the district’s corrective steps during the board meeting on Aug. 19.

Assistant Superintendent for Business John Tim presented the administration’s response to six OSC recommendations, saying the district had implemented or partially implemented most items and that the presentation and the response had been posted and published as required.

Why it matters: The discussion focused on fund-balance levels, reserve accounts and budgeting methodology — topics that affect the district’s ability to weather state-aid fluctuations, unforeseen retiree buyouts and health-care cost increases.

Key points from the administration’s presentation - Background on the OSC review: The OSC conducted an audit (initial review in November 2024) and revisited the district in early 2025 to evaluate progress on recommendations. - Budgeting and salary forecasting: Tim said earlier budgeting methods produced inflated salary lines and that for 2024–25 and 2025–26 the administration moved to a line-by-line, employee-specific salary forecast to reduce variance between budgeted and actual salary costs. - Fund-balance explanation: The superintendent and business office explained an $8 million fund-balance set-aside earmarked for a one-time payment to BOCES for a capital project. The district planned to pay the BOCES share up front but the financing model failed when one neighboring district voted against the plan. As a result, Tim said paying upfront would have increased interest costs; the district kept the funds in reserve rather than spending them immediately. - State-aid exposure and reserves: Tim and the superintendent discussed the district’s high dependence on state aid (district figures shown in the presentation referenced a roughly $103 million budget and roughly $69 million in state aid). They noted that state-level fiscal pressures — including a recently reported roughly $3 billion state obligation to cover expanded health coverage for certain residents — could compress state revenues and increase budgetary risk for aid-dependent districts. - OSC recommendations and district response: The administration walked through OSC recommendations about reasonable budgeting, appropriating fund balance only as needed, reducing surplus fund balance, reviewing reserves, funding for reserves and revising reserve-fund policy. The administration reported most items had been acted on or were in active review (for example, the reserve-fund policy revision was with the policy committee).

Board discussion and follow-up Board members asked whether unspent building- or department-level budget lines contributed to the surplus and whether tighter controls could reduce accumulated fund balance. Administration responded that many unspent items are legitimately unused and that prudent end-of-year spending (for one-time capital or instructional items) had been used in recent years to purchase band instruments, AEDs and equipment rather than let those needs go unmet.

The board also discussed options for using the larger surplus: one-time capital projects, reserve funding or paying down debt. Administration emphasized some reserves require voter approval before funds may be added or spent, while other reserve moves can be done by board resolution. The district said it will continue reviewing which reserve accounts should be funded and how to allocate the approximately $8.1 million in surplus funds identified in the discussion.

No board motion was recorded to change reserves during the meeting, but the board later approved an authorization to transfer funds from fund balance to appropriations as part of routine year-start actions.

Documents and next steps: The district posted the OSC document and the administration’s response on the district website; the business office will continue reserve-policy revisions with the board’s policy committee and will provide further analysis for board consideration about appropriations, capital projects and debt-payment options.