[read complete report - pdf]

Purpose of Budget Review

The objective of this review was to provide an independent evaluation of the Rochester City School District’s (District) adopted budgets for the 2018-19 and 2019-20 fiscal years.

Background

The District is located in Monroe County. Following the District’s September 19, 2019 disclosure that preliminary results of its annual external audit revealed an unplanned deficit had occurred during the 2018-19 fiscal year, numerous interested stakeholders called upon this office to provide an independent review of the District’s finances. Given the severity of the situation, Comptroller DiNapoli immediately deployed staff to begin a review.

Key Findings

• Due to several inaccurate estimates, the District is on track to incur a 2019-20 budgetary deficit of approximately $31.6 million, even accounting for the numerous cost-savings and avoidance measures, including personnel layoffs, recently implemented by the Superintendent and Board of Education.
• The District has no available unrestricted fund balance to mitigate the budgetary deficit.
• The District reported a deficit unrestricted general fund balance of $8.9 million at June 30, 2019.
• If current District operating trends continue, we project the District will have a fiscal year-end deficit of approximately $40.5 million.
• Absent additional severe budget cuts, short-term borrowings or outside intervention, the District will not have sufficient resources to meet its financial obligations by the end of the fiscal year ending June 30, 2020.

Key Recommendation

• Our Office developed a two-part approach. The first effort is the recent review of the adopted budgets for the 2018-19 and 2019-20 fiscal years. Thereafter we will review and report on the District’s financial procedures used to develop its budgets, including improvement recommendations.