Because of an accounting error, the Bedford School District’s surplus for the fiscal year ending June 30, 2008, was actually $1,526,231 instead of $2,096,577 – a $570,346 difference.

Since the school district had already used the $2 million surplus to set the 2008 tax rate, it made up the $570,346 difference from the current operating budget, which also is expected to yield a surplus by June 2009.

Minus the $570,346, that surplus is now expected to be smaller – about $430,000.

The discrepancy was the result of approximately $800,000 in revenue from the Manchester Water Works bond that the school district had misclassified since 2006.

That revenue went to the general fund, instead of the capital projects fund, resulting in surpluses that were higher than they expected and a potential deficit in the capital projects fund, according to a memo Chief Financial Officer Mark Conrad sent to the School Board at the end of December.

Conrad told the School Board the accounting error was the result of a software problem. He said the school district’s auditors and the company that supplies the software had identified the source of the problem.

They “determined that the initial settings within the ADS accounting software were incorrect when it was first installed, resulting in some one-sided bookkeeping entries,” Conrad said. “We immediately made a correction to our software settings. The auditors have not been able to explain why their firm didn’t identify the misclassification of revenues in either the FY2006 or the FY2007 audits.”

Conrad said he had recently himself discovered the misclassification. Conrad also told the School Board that $169,000 remains from the $55.4 million in funding for the construction and start up of Bedford High School. That extra money will also be used to make up for the accounting error.