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Audit Objective

Determine whether District officials adequately managed fund balance in the general fund.

Key Findings

District officials:

• Developed budgets that were not structurally balanced by appropriating fund balance each year, including $1.5 million to finance the 2018- 19 budget when only $283,749 was available to fund operations. As a result, the District ended 2017-18 with a $1.2 million unassigned fund balance deficit.
• Ineffectively budgeted each year for various known expenditures and revenues.
• Developed a long-term financial plan that was unrealistic when compared to the adopted budgets.

Key Recommendations

• Adopt realistic, structurally balanced budgets based on historical or known amounts and reduce the reliance on fund balance as a financing source.
• Discontinue the practice of appropriating fund balance that is unavailable.
• Maintain reasonable fund balances and reserves in accordance with adopted policies.
• Ensure long-term plans are realistic, periodically updated and used when creating budgets.

District officials agreed with our recommendations and have initiated or indicated they planned to initiate corrective action.