When Michael Nawrocki of the accounting firm of Callaghan Nawrocki LLP appeared in front of the Mineola School Board and the public in January to give his report of the school district's 2004-2005 fiscal year, he did not paint a pretty picture.

"It was not a pleasant experience," he said.

After Callaghan Nawrocki conducted its independent audit of the 2004-2005 school year, it was found that the district over expended its taxpayer-approved budget by approximately $3.2 million.

In addition, it was found that the district's financial position reflected a $5.8 million district-wide fund deficit as of June 30, 2005 with fund deficits in the General Fund and Capital Projects of $1.2 million and $4 million respectively.

Last month, Nawrocki appeared in front of the school board again, but this time, he had better news to report. After conducting its annual audit of the budget, Callaghan Nawrocki found that the expenses for the 2005-2006 fiscal year were under budget. In addition, the General Fund reflected a balance of $2 million as of June 30, 2006.

In addition, the district closed out the 2005-2006 fiscal year with an undesignated fund balance of $868,000 after a 5.3 percent increase in revenues to $71.8 million and a 5.7 percent decrease in expenses to $67.3.

The audit identified the reasons for the positive fund balance in the General Fund to be $800,000 in increased interest income and charges for services; $800,000 in additional state aid; $1 million under budget in instruction; $500,000 under budget in employee benefits and $500,000 under budget in general support.

"The thing we were very pleased about is that in one year, we did a lot of work in responding to control issues that were identified over the last two years. We properly budgeted in 2005-2006, given the restatements of the prior year's [2004-2005] budget, that resulted in us having excess funds that ultimately will now offset the negative fund equity that we had at the end of last year," said Superintendent of Schools Dr. Larry Licopoli. "What we were dealing with in terms of a two or three year process to reduce that negative fund equity [at the end of the 2004-2005 budget] to zero, we eliminated that in one school year."

Dr. Licopoli said he was appreciative of the school district's business administrative staff. "We went to a very negative situation to a very positive situation in which the financial health of the district is definitely in the right direction now. We have the team in place that is earning the trust of the board and the community," he said.