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Audit Objective

Determine whether the Board and District officials properly managed fund balance and reserves.

Key Findings

• Appropriations were overestimated by an annual average of $2.3 million. As a result, appropriated fund balance, which annually averaged $1.8 million, was not needed to finance operations.
• The Board and District officials did not transparently budget to fund a capital reserve.
• The Board did not review all reserves and District officials did not prepare an annual report of reserves, as required by the District’s policy.
• The unemployment insurance reserve is overfunded ($604,000) and the debt reserve is improperly restricting $245,000.

Key Recommendations

• Adopt budgets with realistic, transparent estimates of appropriations and appropriated fund balance.
• Review all reserves to determine whether balances are necessary and reasonable, and use excess amounts in accordance with applicable statutes in a manner that benefits taxpayers.

District officials generally disagreed with our recommendations. Appendix B includes our comments on issues raised in the District’s response.