An auditor from the New York State Comptroller’s Office recently spent more than one month working in a makeshift office in the Cazenovia Central School District offices reviewing the finances of the district to ensure that Cazenovia is spending its money responsibly. The state audit was not the result of any district incompetence or malfeasance — and the results showed none of either — but rather from the Comptroller’s determination that Cazenovia CSD is suffering from “moderate” fiscal stress.

In layman’s terms, the district is running out of money and using up its reserve funds and the state wants to know why.

“We got caught by the reduction in state aid, and the GEA (Gap Elimination Adjustment) has robbed the district of millions of dollars over the past five years all while costs have increased,” said Cazenovia Superintendent Matt Reilly. “Couple that with the state tax levy limit that hurts our ability to raise money and it equals a recipe to spending down the fund balance.”

In January 2014, Cazenovia was named one of 52 state school districts “susceptible to fiscal stress” in the Fiscal Stress Monitoring System report released by State Comptroller Thomas P. DiNapoli. That report used numerous financial indicators to create an overall fiscal stress score which classified whether a district was in “significant fiscal stress,” in “moderate fiscal stress,” as “susceptible to fiscal stress,” or “no designation.” It also analyzed separate environmental indicators that might affect a school district’s finances, such as student enrollment, property value, budget vote results and poverty.

That was the first time Cazenovia had ever appeared in the comptroller’s financial stress report.

DiNapoli’s latest fiscal stress monitoring report and designations relied on school district data as of Dec. 31, 2014. In that report, Cazenovia was moved up from being “susceptible” to fiscal stress to now suffering “moderate” fiscal stress, which means the district’s “fiscal score” as determined by the comptroller’s office was greater than or equal to 45 percent. Cazenovia was scored at 45 percent.

Of the 27 school districts on the moderate fiscal stress list, Cazenovia is one of only two from Madison County. The other local district is Brookfield, which received a score of 53.3 percent.

Cazenovia’s score was based largely on its actions in spending down its fund balance every year for the past six years, Reilly said.

The district’s 2014-15 budget included the spending of $250,000 in reserve funds, which was a significant improvement from the past five years, of which $750,000 in reserve funds was used in 2013-14, and more than $1 million in reserve funds the previous four years. The district also reduced staff and found other efficiencies during those years to curtail spending increases.

During that same time period, Cazenovia was stripped of more than $6 million in state aid through the GEA.

The preliminary indications of the audit are that the Cazenovia Central School District is considered neither wealthy nor poor, which means it does not qualify for much state aid, it has limited local resources to increase its revenue and there was no malfeasance in its finances, Reilly said.

Reilly said the auditor will next conduct an exit interview with district officials is then prepare his final audit report. After the report is finalized and submitted, district officials will have 30 days in which to respond and, if corrective action is needed based on the report, the district will have 90 days in which to write a corrective action plan.

There is “no immediate effect” to the Cazenovia district because of the audit, Reilly said — no state funds are being stripped nor any disciplinary action taken, this is just a process in which the state is examining the reason for Cazenovia’s budget woes and seeking to ensure the district takes action to try to reverse the financial course it is on.