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Audit says Potsdam Central School is in good financial shape

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POTSDAM — The Potsdam Central School District’s 2012-2013 external audit reports the district is in good financial shape despite years of declining revenues.

“In the current year, the unassumed fund balance is 5 percent,” said Ray J. “Chip” Clark, of D’Arcangelo & Co., the district’s auditing firm.

While an unreserved fund balance of 5 percent is above the state’s 4 percent limit, Mr. Clark said he’s not concerned about it.

“I don’t feel your fund balance is excessive,” he said of the $1,366,239 account. “Your variances are very much within reason.”

Mr. Clark noted that when budgeted revenues of $27,725,218 were compared to the actual revenues of $25,521,726, the district had a variance of 3.5 percent.

On the expenditure side, Mr. Clark said that variance was 3.9 percent. According to Mr. Clark’s presentation this week, the district had budgeted expenses of $27,725,218 versus actual expenses of $26,506,702.

“You’re going to start seeing those variances go down” as districts can less afford to build in a budget cushion, Mr. Clark said.

He did say, however, that with variances in the 3 to 4 percent range the district was where he would like it to be. Most districts he reviews have variances within the 1 to 5 percent range, he said.

Mr. Clark also noted the district has reserve funds of $112,541 for encumbrances, $605,842 for employee benefit accrued liability, $415,615 for tax certiorari claims, $579,808 for retirement contributions and a $213,889 account for unemployment insurance.

Despite the positive report, Superintendent Patrick H. Brady said the district could be looking at some tough decisions this year.

While the tax cap is widely reported as being 2 percent, Mr. Brady noted the way the law is written the base for the cap is actually 2 percent or the consumer price index, whichever is lower.

“We could be looking at a tax cap or 1.5 percent,” he said, noting the CPI has been hovering around 1.5 percent for most of the year.

“If we don’t see an increase in state aid, we could be looking at some difficult decisions.”

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