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Audit Objective

Determine whether the Town of Webb Union Free School District (District) Board (Board) and District officials adopted realistic budgets and properly managed fund balance in accordance with statute.

Key Findings

• The Board and District officials did not adopt realistic budgets and did not properly manage fund balance.
• The Board consistently overestimated appropriations in the 2018-19 through 2020-21 budgets by a total of $3.7 million (16 percent) and appropriated fund balance totaling $3.5 million that was not needed.
• Officials improperly overstated fiscal year-end encumbrances by approximately $974,000 from 2018-19 through 2020-21.
• When unused appropriated fund balance and invalid encumbrances are added back to surplus fund balance, surplus fund balance increased to approximately 26 percent, as of June 30, 2021, exceeding the four percent statutory limit.

Despite reporting excess surplus fund balance, the Board increased the real property tax levy by 6.8 percent from 2017-18 through 2021-22 and levied more taxes than needed to fund operations.

Key Recommendations

• Develop budgets with reasonable appropriation estimates, only appropriate fund balance when needed and ensure encumbrances are for valid commitments.
• Comply with the statutory surplus fund balance limit.

District officials generally agreed with our recommendations and indicated they would take corrective action.