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Taxpayers' Guide to State and Local Audits

City of Schenectady – Fiscal Stress (2012M-187)


Released: November 13, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to examine the City’s financial condition for the period January 1, 2011, to June 30, 2012.

Background

The City of Schenectady has approximately 66,000 residents and is located within Schenectady County in eastern New York. The seven-member Common Council is the City’s legislative branch. The Mayor is the City’s chief executive officer and is responsible for supervising, directing and controlling the administration of all City Departments. The City’s 2012 general fund budget totaled $79.5 million and was funded primarily by property taxes, sales tax and State aid.

Key Findings

  • The City ended the 2011 fiscal year with an operating deficit of $4.8 million and an unassigned fund balance deficit of $1.9 million. For the past four years, the City has incurred planned operating deficits that have reduced fund balance in the general fund.
  • City officials have adopted realistic budgets and have not overspent the budgets for the past four years. While the City has experienced operating deficits during this period, the actual operating deficits were less than planned.
  • It is questionable whether the appropriation of $3,128,694 from the tax stabilization reserve fund toward 2012 operations met the requirements of General Municipal Law.
  • As part of its multi-year plan, the City has revenue enhancements and savings initiatives for 2013 that could total as much as $4.0 million. Even if the City realized only half this amount, these initiatives, in conjunction with the 2 percent levy/revenue increase, would be enough to close the 2013 budget gap. Many of these initiatives would be on-going, and therefore, also would reduce the subsequent year gaps.

Key Recommendations

  • City officials should implement a plan to eliminate the unassigned fund balance deficit.
  • City officials should closely monitor the City’s use of fund balance to ensure that action is taken, if necessary, to identify other funding sources that can be used if fund balance is no longer available to fund City operations.
  • City officials should ensure that the tax stabilization reserve funds are used in accordance with GML Section 6-e.
  • City officials should continue to update the multi-year plan to ensure the most current financial data and conditions are available for the Council to make informed decisions about the City’s financial operations.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236