[read complete report - pdf]

Audit Objective

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

Key Findings

• The Board overestimated appropriations by a total of $3.8 million and annually appropriated $500,000 of fund balance that was not used to finance operations during our audit period.
• As of June 30, 2018, surplus fund balance totaled almost $1.5 million, 7 percent of the 2018-19 budgeted appropriations, exceeding the statutory limit by approximately $626,000.
• The reserve fund plan is inadequate and certain reserve balances were excessive and not being used.

Key Recommendations

• Adopt budgets that include reasonable estimates for appropriations and the amount of fund balance that will be used to fund operations.
• Reduce surplus fund balance to comply with the statutory limit and use the excess funds in a manner more beneficial to taxpayers.
• Adopt a comprehensive written reserve policy, including plans for the use of reserves in accordance with applicable statutes.

District officials generally agreed with our recommendations and indicated they planned to initiate corrective action. Appendix B includes our comment on an issue raised in the District’s response letter.