Purpose of Audit

The purpose of our audit was to examine the District’s financial management for the period July 1, 2011 through October 2, 2013.

Background

The Letchworth Central School District (District) is located in the Towns of Castile, Eagle, Gainesville, Genesee Falls, Pike, Warsaw and Wethersfield in Wyoming County. The District is governed by an elected nine-member Board of Education. The District’s budgeted general fund appropriations for the 2013-14 fiscal year total $17.4 million.

Key Findings

• For the five fiscal years ending June 30, 2013, District officials consistently over-estimated expenditures by a total of $8.3 million. These budgeting practices generated approximately $3.9 million in operating surpluses. Although District officials appropriated $300,000 of fund balance in each of the last five fiscal years to reduce the tax levy, the Board over-estimated expenditures by an average of $1.7 million annually, thus negating any benefit the appropriation of fund balance would have in reducing the property tax levy.
• District officials also used some of the annual operating surpluses to fund eight general fund reserves and one debt reserve that, as of June 30, 2013, totaled $10.5 million and $1.4 million, respectively. Five of these reserves are over-funded.

Key Recommendations

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