Across 22 years and $247.3 million in manufactured surplus, across a budget that has never once gone down, across nine years of identical $20 million Capital Reserve propositions and a 5–0 board vote to put another one on the May ballot, the response from the District and its defenders has been some version of the same line:

"This is just how school finance works. Nobody is breaking any rules."

It is a comforting story. It is also already adjudicated.

In December 2016, the New York State Office of the State Comptroller (OSC) released Report 2016M-328 — Jericho Union Free School District, Financial Management. Signed by Comptroller Thomas P. DiNapoli. Audit period July 1, 2014 through May 24, 2016, with the analysis extended back to 2012-13 for trend purposes and forward through the 2016-17 budget.

The District agreed with the findings. The District filed a Corrective Action Plan within the 90 days required by General Municipal Law § 35 and Education Law § 2116-a.

And then the District went out and produced the largest single-year manufactured surplus in its 22-year audited history — $17.9 million in FY2017 — followed by $16.9 million in FY2018. The two highest surplus years in the entire dataset both came after OSC told them, in writing, to stop.

We are not arguing the District violated the rules. We are telling you the State of New York already documented that they did, that they agreed they did, and that they kept doing it.

New York Real Property Tax Law caps the amount of unrestricted fund balance a school district can keep at the end of any year: no more than 4% of the next year's budget. Anything above that is, by statute, supposed to be returned to taxpayers — through a lower levy, by funding one-time expenditures, or by funding legitimate reserves.

The Comptroller's office knows the cap is gameable, so they don't just look at the headline number on the audit. They run a recalculated fund balance test, and they applied it to Jericho:

7.5% and 8.7% — roughly double the 4% cap, in two consecutive years.

How does the recalculation work? It is the most basic accounting move imaginable. Take the unrestricted fund balance the District reports. Add back any "appropriated fund balance" the Board pretended it would use to lower next year's levy but never actually did. Divide by next year's budget. If the result is over 4%, the cap is being circumvented.

Why does the recalculation matter? Because the dodge is the entire game. Each year the District tells voters: "We're appropriating $4 million / $5 million / $6 million of fund balance to lower next year's tax levy." The levy gets approved on that promise. Then — every single year — the District over-collects again, generates an operating surplus, and the appropriated fund balance is never actually used. It just stays where it was.

Sound familiar? It should. This is the Surplus Cycle documented in 22 Years, $247 Million in Surplus — over-collect → manufacture surplus → recycle a fraction into a bigger budget → over-collect again. OSC named the mechanism in 2016. Jericho Voice put a 22-year price tag on it: $247.3 million.

The State had a name for it. The District had a habit of doing it.

From the audit, page 4, opening paragraph of the Financial Management section:

Read that twice. Every red flag the Comptroller's office uses to identify districts gaming the cap is in one paragraph:

And then the audit goes one level deeper. It identifies which line items the District was over-budgeting:

The State of New York handed the District a list of the exact line items being padded. The District went into the next budget cycle and padded the same line items again. That is in the audit.

When District officials were asked why, they told auditors that they overbudget appropriations "as a contingency for unexpected expenditures." That's the official explanation, on the record, for the mechanism that has produced $247.3 million in manufactured surplus over 22 years, of which only 35.5% was ever recycled back into budgets and none of it was returned to taxpayers.

A "contingency" you take every year, for two decades, that pays out every year, is not a contingency. It is a tax.

OSC didn't stop at the cap. They went into the reserves and, of the four reserves on Jericho's books at the time, called out one by name:

Seven years of retirement contributions, sitting idle. Against a Board policy that targeted ten years — a policy OSC characterized in writing as itself unreasonable.

The District's defense, recorded in the audit: "officials told us they do not consider this reserve to be excessive because they funded the reserve at Board-approved policy levels."

In other words: the policy says we can hold ten years' worth, so seven years is fine. That's a circular defense — the Board sets a policy ceiling that's already too high, then points to its own ceiling as proof the balance is reasonable. OSC was unimpressed.

The District today carries an Employees' Retirement System reserve of $14.32 million and a separate Employee Benefit Accrued Liability Reserve (EBALR) of $17.27 million, per the June 30, 2025 audited financials — for a combined $31.59 million parked against employee-related obligations. Different buckets. Same instinct: stack cash, point to a Board policy that allows it, repeat.

This finding doesn't get enough oxygen, and it should:

A million dollars sat in a fund whose stated purpose was being funded out of a completely different bucket. For four years. While the levy went up.

The current version of this is the three Capital Reserves (II, IV, and V) all carrying balances simultaneously on the 2025 audit, plus the cash-only capital program that sidesteps bonding entirely, plus the fact that the District today reports zero bonded debt on its books — a fact the District treats as a virtue and that voters are about to be asked to extend by approving a sixth capital reserve.

Same instinct. Stash cash in a labeled box. Justify the box by its label. Pay for the actual work some other way. The labels change. The behavior doesn't.

Here is the part that ought to end the "we fixed it" defense for good.

The audit notes — and this is essential — that for 2014-15, the District "properly reduced the unrestricted fund balance to the statutory limit by transferring $16.3 million into the capital project fund the following year." That's the District's own claim of compliance.

Look at how that $16.3 million was constructed: $10 million from closing Capital Reserve I, plus $6.3 million of fund balance — moved at year-end into the capital projects fund pursuant to a voter-approved transfer in May 2016. And in the same year — May 19, 2015 — voters had established Capital Reserve II for $10 million, which was fully funded by the 2015-16 year-end, ready to be drawn down again the next cycle.

The "fix" was to use one reserve to drain into capital projects, while simultaneously voting in another $10 million reserve to refill. That's the maneuver OSC has elsewhere flagged as a red flag in itself: unbudgeted year-end transfers used to dump surplus into reserves to avoid hitting the 4% cap.

In Jericho's case, it wasn't unbudgeted — it was voter-approved. But the mechanism is identical, and the result is the same: the unrestricted fund balance gets squeezed to 4% on paper, and the rest of the surplus goes into a different bucket where the cap doesn't apply.

Every cycle since 2017, this is the structure: end the year at 4% on the dot in unrestricted fund balance, with an ever-larger pile sitting in restricted reserves. By June 30, 2025, the District holds $72 million in total fund balance — $53 million of it in reserves, $5.75 million unassigned, zero bonded debt — against a $143.9 million operating budget.

That is not a district that fixed the 2016 finding. That is a district that learned how to keep the unrestricted line at 4% and let the rest grow elsewhere.

Here is the chart that should follow you out of this article.

OSC issued the audit in December 2016. The District filed its Corrective Action Plan in early 2017.

Then look at what the manufactured surplus did, year by year, from 22 Years, $247 Million in Surplus:

In the nine post-audit fiscal years (FY2017–FY2025), Jericho generated approximately $130 million in additional manufactured surplus after the State Comptroller told the District, in writing, that the underlying budget practices were producing surpluses in violation of the recalculated 4% test.

The audit didn't slow it down. The audit was the peak.

If you want a one-line indictment of the Corrective Action Plan, it's this: the year right after Jericho promised the State it would stop, it generated more manufactured surplus than in any year before or since.

This newsletter has walked through the workshop charade — the slides that say "remain committed to being a premier school district," the strategy verbs that are all "continue" and "expand," the foregone conclusion presented as community input. Here is the same comparison, run against the audit instead of against the workshops:

You are being told: "The reserves are prudent and required by law." The State already said: The retirement reserve at seven years of contributions was excessive, and the Board policy allowing ten years was itself unreasonable. The District funded multiple reserves above demonstrated need. (Report 2016M-328, p. 9.)

You are being told: "We appropriate fund balance to keep the tax levy down." The State already said: The District appropriated $14.9 million in fund balance over three audit years that "was not needed to finance operations." It was a paper move to make the 4% cap calculation look right. (Report 2016M-328, p. 4.)

You are being told: "Our budgeting is conservative — we plan for contingencies." The State already said: The District overestimated appropriations by 9 to 12 percent for three out of four years, concentrated in specific identifiable line items, and continued overestimating the same line items in the next budget cycle after being told. (Report 2016M-328, p. 5.)

You are being told: "The capital reserve is required for capital work." The State already said: When fund balance and reserve funds grow without being used, "taxpayer money is withheld from productive use and the tax levy may be higher than necessary." (Report 2016M-328, p. 6.)

You are being told: "Zero bonded debt is a sign of fiscal responsibility." The State already said: Holding $1.1 million in the debt service fund while paying debt out of the general fund meant general fund resources were not available for other uses, "including the reduction of real property taxes." (Report 2016M-328, p. 8.) The same logic applies to today's $53 million in restricted reserves and zero bonded debt — the work is getting done, but the cash is being held against tax relief that never comes.

The five lies aren't lies because the District is making them up. They are lies because the State of New York adjudicated each of them nine years ago, and the District agreed in writing.

Pursuant to Section 35 of General Municipal Law and Section 2116-a(3)(c) of New York State Education Law, Jericho was required to submit a written Corrective Action Plan (CAP) within 90 days of the December 2016 audit. The Board was required to make the CAP available for public review in the District Clerk's office, and a copy was forwarded to the Commissioner of Education.

That CAP exists. It is a public record. It is obtainable by FOIL. Comparing what the District promised in the 2017 CAP against:

…would take a single afternoon. Not a single trustee on the current Board has done it in public.

In the nine and a half years since Report 2016M-328 was issued, OSC has not conducted a follow-up financial management audit of Jericho UFSD. The only intervening State audit (Report 2022M-194, July 2023) examined data privacy controls — specifically, whether business office staff were properly governed by an acceptable use policy — and is unrelated to the budget, fund balance, or reserve findings of 2016. The financial findings have never been re-tested by the State.

The State has the receipts. The District has the math. Nobody has put them next to each other.

That, in 2026, is on us.

Then put the numbers next to it:

Same playbook. Bigger pile. State already on the record.

There is a number Jericho loves to tell.

It is the per-pupil spending figure — the dollars the District says it invests in every child. It shows up in superintendent presentations. It shows up in the press releases that follow the Newsday rankings and the U.S. News lists. It shows up in the parent-Facebook arguments where anyone questioning the budget is told "do you know how much we spend per student in this district?" like that's the end of the conversation.

Here is how the number gets built. Take the operating budget — $143.9 million for 2025-26 — and divide by enrollment. Some sources use expenditures instead of budget; some include state aid, some don't. The basic move is always the same: a really big numerator, divided by a relatively small student count, equals a per-pupil figure the District is happy to put on a slide.

There is a problem with that math. It's the same problem this newsletter has been documenting for two months.

The numerator is fake — and even on the most charitable accounting, it lies about what residents pay.

Even when the per-pupil figure is built on actual expenditures rather than the budget, it tells you what the District spent. It does not tell you what taxpayers were charged. Across 22 audited fiscal years, the District has consistently collected from taxpayers and failed to spend an average of $11.2 million per year. Over the most recent decade — the period directly relevant to the children currently in the schools — the average annual manufactured surplus has been $14 million. That money was budgeted. It was levied. It was collected. It was never spent on a student. It went into reserves, into next year's bigger budget, into the cash pile that now sits at $72 million on the District's balance sheet.

So the per-pupil "spending" the District puts on a slide may technically reflect what was spent. But the cost — what residents pay per child to fund that spending — is meaningfully higher every single year. And the gap doesn't go to a classroom. It goes to a reserve fund.

Run the math the District doesn't run.

Enrollment in 2015-16, per the OSC audit: approximately 3,000 students. Enrollment today, per the BOCES Demographer's October 2025 count that the District itself relied on for the 2026-27 enrollment projection: 3,123 students, with 3,076 projected for next year.

Read that twice. After a decade, the student body is essentially flat — within roughly 4% of where it was when OSC audited the District. Over that same decade, the operating budget grew from $122 million to $143.9 million (a 17.6% increase), and total reserves grew from $45.4 million to $53 million.

Same kids. Bigger budget. Bigger reserve pile. Where, exactly, did the extra money go?

Now do the per-pupil version of the question:

Seventy-nine thousand dollars. Per kid. Sitting in EBALR, ERS, Capital Reserves II/IV/V, and unassigned fund balance. Not on a desk. Not in a textbook. Not paying a teacher. Not in a counselor's caseload. Not in an instrument, a science kit, a software license, or a single hour of additional tutoring inside the school day.

The per-pupil figure on the District's slide isn't lying about the budget — the budget really is that large. It's lying about what the budget did. It's lying about how much of it ever made it to a teacher, a textbook, a computer, a counselor, or a classroom. It's lying about what your kid actually got for the property taxes you paid in their name.

The District cannot simultaneously brag about per-pupil investment and sit on $53 million in reserves accumulated over 22 years of structural over-collection. Pick one. Either the money was needed to educate the children — in which case, where is it? — or it wasn't needed, in which case stop putting it on a slide as proof of how much you care about them.

Every year a parent looks at the per-pupil number and assumes that is the size of the bet this community is making on their kid. It is not. The bet on the kid is what actually got spent in the classroom. The rest is the bet the District is making on its own balance sheet — funded, every single year, by taxes collected in your child's name and never spent on your child.

If the per-pupil ranking is the thing the District wants to be measured by, then the honest version of that ranking subtracts the $11–14 million a year that doesn't reach a student before the District takes a bow for it.

Run that calculation publicly, one time, in a slide deck. See how often the per-pupil number gets brought up after that.

The question is whether a District that was formally cited by the State Comptroller in 2016 for exceeding the statutory fund balance limit — using OSC's own recalculation method, with reserves over-funded against demonstrated need, and with the District agreeing to corrective action — has done anything in the nine years since that would justify continuing to take the practice on faith.

The 2017 CAP is the District's own answer to that question. The chart of manufactured surplus from 2017 forward is the State's. The two answers do not match.

So when the District tells you, this cycle, that the reserves are prudent, that the capital reserve is required, that this is just how Long Island districts manage their finances — understand that the State of New York already adjudicated each of those claims. The findings are on file. The District agreed in writing. And then the very next year, the manufactured surplus hit an all-time high.

The budget never goes down. The reserves never come down. The State already caught them. We just keep not looking.

$118.85 million next year. Up 2.94%. On top of $72 million in fund balance, $53 million in reserves, and zero bonded debt.

It will not stop unless you stop it.