Purpose of Audit

The purpose of our audit was to examine the District’s financial condition for the period July 1, 2012 through December 31, 2015.

Background

The Montauk Union Free School District is located in the Town of East Hampton in Suffolk County. The District, which operates one school with approximately 475 students, is governed by an elected five-member Board of Education. Budgeted appropriations for the 2015-16 fiscal year totaled approximately $19 million.

Key Findings

• Overestimating appropriations in the adopted budgets from 2012-13 through 2014-15 resulted in a cumulative operating surplus of approximately $1 million.
• The District’s unassigned fund balance during these years exceeded the statutory limit.
• District officials appropriated nearly $2.8 million of fund balance in the annual budgets but did not use approximately 94 percent of this amount.
• District officials have not developed formal, specific reserve plans.
• The District has not developed long-term financial and capital plans.

Key Recommendations

• Use surplus funds to fund one-time expenditures, fund needed reserves and reduce property taxes.
• Ensure that the District’s unassigned fund balance complies with statutory limits.
• Discontinue the practice of adopting budgets that result in the appropriation of unrestricted fund balance that will not be used to fund operations.
• Create and adopt a formal plan that defines objectives for each reserve.
• Develop and adopt comprehensive multiyear financial and capital plans.