Purpose of Audit

The purpose of our audit was to evaluate the District’s financial condition for the period July 1, 2009 through May 31, 2012.

Background

The Hadley-Luzerne Central School District is located in Saratoga and Warren Counties. The District has a current enrollment of 875 students and 189 full- and part-time employees. The District’s enrollment has declined almost 22 percent over the past 10 years. The District is managed by a Board of Education comprising five elected members. The District’s adopted general fund budget for the 2012-13 fiscal year is $18,081,780.

Key Findings

The Board adopted budgets during our scope period that cut costs by abolishing positions, outsourcing services or sharing them with other districts, and saving money on energy costs. Given the District’s declining enrollment and the current economic climate, cost-cutting is prudent. However, the District’s budgets did not cut revenues at the same pace.

• The District has accumulated an increasing amount of money in restricted fund balance, or reserves, and built up amounts of unexpended surplus funds that exceeded the legal limit in the past two years.
• Although the District appropriated more than $1 million in unexpended surplus each year to help finance the ensuing year’s budget, the District did not use these funds because it generated a surplus each year.
• The Board has not developed a multi-year financial plan to improve the budget development process.

Key Recommendations

• Prepare budgets that keep revenues in line with expenditures.
• Adopt a policy for the use of fund balance. Adopt a reserve policy establishing how reserves will be funded, how much will be reserved, and when reserves will be used.
• Develop a multi-year financial plan to provide a framework for future budgets and facilitate management of the District’s financial operations.