Purpose of Audit

The purpose of our audit was to evaluate the District’s financial condition for the period July 1, 2010 to August 12, 2013.

Background

The Cleveland Hill Union Free School District is located in the Town of Cheektowaga, in Erie County. The District is governed by the Board of Education, which is comprised of seven elected members. The District’s budgeted general fund appropriations for the 2013-14 fiscal year are approximately $30 million.

Key Findings

• For the three year period ending June 30, 2013, District officials have consistently over-estimated expenditures by a total of $12.2 million and increased the tax levy by 5.4 percent. These budgeting practices generated approximately $2.4 million in operating surpluses, which caused unexpended surplus funds to exceed statutory limits in each of the past three years. For example, at June 30, 2013, unexpended surplus funds exceeded statutory limits by approximately $3.2 million. Although District officials appropriated approximately $3 million in each of the last three fiscal years to reduce the tax levy, the Board over-estimated expenditures by between $3 million and $4 million annually, thus negating any benefit the appropriation of fund balance would have in reducing fund balance or the property tax levy.
• District officials used some of the annual operating surpluses to fund nine reserves that, as of June 30, 2013, totaled $4.6 million. Six of the nine reserves are over-funded.

Key Recommendations

• Develop realistic estimates of appropriations and the use of fund balance in the annual budget. Develop a plan for the use of the excess unexpended surplus fund balance and the excess amounts in reserve funds in a manner that benefits District taxpayers and is in compliance with statutory requirements.
• Review reserves and transfer excess balances in compliance with statutory requirements.