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District reports ACA penalty corrected to $7,560; breakfast-to-classroom practice stopped after audit
Summary
District business official said an initial IRS calculation gave an $806,640 ACA penalty that was reduced to $7,560 after review; auditors flagged the practice of delivering breakfast to K–1 classrooms, and the district will move breakfasts back to the cafeteria while it drafts a corrective-action plan.
The district's business/finance director told the board that the Internal Revenue Service initially billed the district a large penalty for Affordable Care Act noncompliance — a figure reported in the IRS notice as $806,640 — but that figure was corrected after review to $7,560.
"After investigation, many discussions with both attorneys and other folks and some, honestly, some really helpful people at the IRS, we learned a little bit. We were able to correct some things in the paperwork...and we owe a penalty of $7,560," the director said.
The director said the initial calculation stemmed from how the IRS counted certain part-time employees as full-time for monthly measurement purposes; the district will build the recurring penalty cost into next year's budget. Board members asked how many employees were affected; the director said two.
Separately, auditors from the New York State Child Nutrition Management Services Division completed a lunch audit and found the district's practice of taking breakfast to kindergarten and first-grade classrooms did not meet the state's "offer versus serve" requirement. The district agreed to stop the classroom breakfast practice for now, returning breakfast service to the cafeteria while staff complete required training and await the formal audit report.
The director said a corrective action plan will be drafted and brought to future board meetings and posted on the district website when completed. He also reported the district's wellness committee reviewed policy language and will recommend wording updates to the board this summer.
Next steps: The full audit report and corrective-action plan are expected in the coming weeks and will be presented to the board for formal acceptance and posting.
