Purpose of Audit

The purpose of our audit was to evaluate the District’s financial operations for the period July 1, 2011, to June 30, 2013.

Background

The Hancock Central School District is located in the Towns of Deposit, Hancock and Tompkins in Delaware County. The District is governed by the Board of Education which comprises five elected members. For the 2013-14 fiscal year, the District’s operating budget is approximately $10 million.

Key Findings

• Although the Board and District management believed they were effectively managing the District’s financial condition, the adopted budgets continually included over-estimated appropriations. For fiscal years 2007-08 through 2010-11, these budgeting practices generated $2.76 million in operating surpluses, which caused the accumulated fund balance to exceed the statutory maximum of 4 percent of the ensuing year’s budget for those same fiscal years.
• To reduce the unexpended surplus fund balance and bring it closer to the 4 percent limit, District officials made unplanned transfers to the District’s reserves. We found those reserves to be over-funded by approximately $699,000 at June 30, 2013. The Board was more conservative in its budgeting practices for fiscal year 2011-12 and 2012-13 and reduced its unexpended surplus funds to a more reasonable level. However, we found that the Board did not include in its 2013-14 budget more than $790,000 in insurance revenues it expects to receive during this fiscal year ending 2013-14. This, combined with the over-funded reserves, will bring total available fund balance to more than $1.9 million in fiscal year ending 2013-14.

Key Recommendations

• Develop expenditure and revenue estimates that are realistic and based upon all information available at the time the budget is developed.
• Review all reserve balances and determine if the amounts reserved are necessary, reasonable, and in compliance with statutory requirements.