Purpose of Audit

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the District’s tentative budget for the 2013-14 fiscal year are reasonable.

Background

The Liberty Central School District, located in Sullivan County, issued debt totaling $1.3 million to liquidate the accumulated deficit in the District’s general fund as of June 30, 2002. Local Finance Law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their tentative budgets for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding.

Key Findings

• Based on the results of our review, except for certain matters related to the food service fund, we found that the significant revenue and expenditure projections in the proposed budget are reasonable.
• The proposed 2013-14 fiscal year budget for the food service fund includes appropriated fund balance in the amount of $36,162. Through February 28, 2013, the food service fund had spent $10,517 more than they received in revenue, which reduces the available fund balance to $39,040. Depending on the results of operations for the rest of this fiscal year, the food service fund may not have $36,162 available to appropriate at the end of the 2012-13 fiscal year.
• The food service fund relies on significant transfers from the general fund each year. The subsidies will only continue to drain the general fund’s fund balance.
• The District’s proposed budget complies with the property tax levy limit set by statute.

Key Recommendations

• Prepare a projection of year-end fund balance for the food service fund to determine how much fund balance they can reasonably appropriate before they adopt their 2013-14 budget.
• Develop a long-term plan to reduce the need for general fund subsidies to fund the food service fund.