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Audit Objective

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

Key Findings

• The Board overestimated appropriations by a total of $2.3 million from 2015-16 through 2017-18 and annually appropriated an average of $495,000 of fund balance that was not used to finance operations.
• As of June 30, 2018, surplus fund balance totaled $1.7 million and was 12 percent of 2018-19 appropriations, exceeding the statutory limit by approximately $1.2 million or 8 percentage points.
• The Board has not adopted a comprehensive written fund balance policy.

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 fund balance policy.

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