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Audit Objective

Determine whether the Board adopted budgets with reasonable estimates and reserves were used for their intended purposes.

Key Findings

• District officials appropriated unrestricted fund balance as a financing source each year for the 2014-15 through 2018-19 budgets. However, because the District generated operating surpluses in three of those years, only a fraction was used to finance operations.
• After adding back the appropriated fund balance that was not used, the recalculated unrestricted fund balance for fiscal years 2014-15 through 2018-19 ranged from 7 percent to 12.15 percent of the ensuing year’s appropriations, exceeding the 4 percent statutory limit.
• Of the District’s six reserves, two were not used as intended and appear to be overfunded.

Key Recommendations

• Adopt budgets with realistic estimates and discontinue the practice of appropriating fund balance that will not be used.
• Develop a plan for the use of excess unrestricted fund balance in a manner that benefits District taxpayers.
• Ensure that reserves are used as intended.