“Today signifies the one-year culmination of a very difficult year here in South Country, that we faced significant fiscal challenges and made difficult decisions to get to where we are. I’m happy to say that together we have strengthened the fiscal oversight. We’ve implemented substantial budget reductions and we’ve taken critical steps to address the structural deficits that have developed over several years,” said John Belmonte, Acting assistant superintendent for Finance and Management Services, at the opening of the audit committee meeting for South Country Central School District on Wednesday, Oct. 14.
External auditor, Michael J. Leone of Cullen & Danowski, gave a presentation on the progress and the findings of an analysis of the previous financial state.
“The audit is an involved process that has a lot of information,” said Leone of the 75-page financial statement.
The 2026-2027 budget of $144 million was developed with the “significant” cuts proposed by the school district, according to Leone. Currently, the district has accounted for $9.8 million of the $11 million available in debt financing.
The audit will be submitted to the New York State Comptroller’s Office to certify the official deficit financing method by the district.
Reserves, the existing fund balance not collected from revenue (i.e., school tax) that has shifted in the case of South Country, was described by Leone as “strategic.” In the $144 million budget, $2.7 million was appropriated from reserves.
“Not only did we use the $2.7 million when we created 2026-2027, that was significantly, significantly less than what was used in prior years,” said Belmonte.
Leone pointed out that reserves have a 60-day window after the start of the school year to reassess and reappropriate funds. He gave the unemployment insurance costs as an example should the district have additional need following cuts.
The Unassigned Budget Fund, the residual money left over in a school district’s general fund after subtracting all liabilities and removing amounts that restricted, committed, or assigned, was in a deficit of $1.7 million last year.
“When you look at the components of what makes up fund balance and how it could change… your actuals came in above your budgeted revenue. That’s a positive… That means your revenues are coming in higher than your budget,” said Leone.
“Just to explain what an encumbrance is and the impact to the financials… even though it’s an obligation to 2025-2026, when it’s paid, it’s usually paid in the subsequent year. Those expenditures become an expense in the 2026-2027 year. So that piece, when the comptroller’s office comes in to certify, they’re going to determine how they’re going to handle that. I believe they will exclude that from the deficit calculation. And that will become a burden on the 2026-2027 budget,” said Belmonte.
Belmonte did stress that this was the speculative viewpoint and that it was not guaranteed until the comptroller’s office made a decision.
Spearheading the financial and budget discussions in the past 12 months, Belmonte said he worked closely with the comptroller’s office in the lead-up to the final submission and that “we wanted to make sure that there were no missteps in the approaches that we were recommending.”
Belmonte addressed concerns that the 2026-2027 budget had been over extended and said the measures taken were “by design.” Specifically, that when he and Leone met with the comptroller’s office, they said, “Even though you guys have Special Act Legislation to fund a deficit, you must finish the 2025-2026 year showing the deficit. If you do not show the deficit, we have no deficit to certify.”
According to Belmonte, this is the reason the encumbered funds—the portion of a fund balance that has not been spent—has been kept separate from calculating the proposed deficit, instead of increasing it, because the deficit will determine what can be financed by deficit bonding.
“The only way you can cover a deficit is to an expense that has been paid either through account payable or an actual payment. An encumbrance is just an earmark against the budget… it’s not an actual expenditure,” said Belmonte.
“I don’t want to unwind $500,000 in encumbrances knowing that we have a $500,000 liability for the current year, so the district’s position was simple,” said Belmonte, who also affirmed that Leone was in agreement with the strategy. “We made the choice to leave the encumbrance and leave it up to the comptroller’s office when they come in to go through their process to certify… they are going to exclude that piece from the approved deficit.”
Chris Rocco, an Audit Committee member and also the president of the school board, inquired further about the accounting steps, stating that if an expense was incurred for services or goods in the 2025-2026 school year that the release of funds would be an expense for that year.
“As a practical thing, I’m putting it out there in the ether so that as others look through it… had we had that money and we understand that this is money we are able to get through the bond financing is based upon that deficit for us to make that jump. This is only a bridge; this does not solve our problem. So why build only a 400-foot bridge to a 410-foot chasm?,” said Rocco.
Belmonte said that the district was “in a really good place” with not bringing the deficit financing “to the wall” with a higher figure.
“As Mike said, the $500,000 is not really material,” said Belmonte.
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