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Audit Objective

Determine whether the Dalton-Nunda Central School District (District) Board of Education (Board) and District officials adopted realistic budgets and effectively managed fund balance and reserves.

Key Findings

The Board and District officials did not adopt realistic budgets and effectively manage fund balance and reserves.

• The Board’s actions to manage fund balance were not transparent and made it appear that the District needed to both increase taxes and use appropriated fund balance to close projected budget gaps.
• The Board circumvented the statutory limit on surplus fund balance by making $7.8 million in unbudgeted year-end transfers to reserves and appropriating $900,000 in fund balance that was not used.
• As of June 30, 2019, recalculated surplus fund balance exceeded the statutory limit by more than $1.3 million or 8 percentage points and two general fund reserves were overfunded.

Key Recommendations

• Develop and adopt budgets that include more reasonable estimates for revenues, appropriations and the amount of fund balance and reserves needed to fund operations.
• Review and fund reserve balances to reasonable levels in accordance with applicable statutes and a Board-approved comprehensive reserve plan.

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