Albany -- Inadequate oversight of financial operations created a $1.8 million deficit and forced the Clinton Central School District to deplete its unreserved fund balance, according to an audit released Wednesday by State Comptroller Thomas DiNapoli.  The district underestimated its deficit by $1.1 million.

“School districts must stringently monitor their finances and have an accurate picture of their fiscal situation,” DiNapoli said. “Unreserved fund balances should be used only in emergency situations or, if there is an excess, to reduce tax levy.  They should not be used to finance recurring expenses that school districts face every year.”

The district experienced six consecutive years of operating deficits that reduced the unreserved fund balance in the general fund from $906,226 in 2000 to a deficit of $696,975 in 2006.  In addition, for FY 2005-06, the district failed to account for $440,402 in expenses and a long-term fund balance deficit of $682,024 for a construction project.

The audit recommends that district officials and the board:

• prepare accurate budget estimates that include plans to eliminate the general fund deficit;
• closely monitor fiscal activity including reviewing detailed budget status reports;  
• ensure the district’s accounting records accurately state the district’s financial position.

The audit also identified deficiencies in the district’s segregation of financial duties, claims processing and inventory control.

The district generally agreed with the audit’s findings and agreed to implement corrective action. The district’s full response is included in the audit.