[read complete report - pdf]

Audit Objective

Determine whether the Lancaster Central School District (District) Board of Education (Board) and District officials properly managed fund balance and reserve funds.

Key Findings

The Board and District officials did not properly manage fund balance and reserve funds. The Board and District officials:

• Did not implement our prior audit’s recommendations¹ to improve their budgeting practices and be more transparent with District residents and taxpayers.
• Overestimated budgetary appropriations by an annual average of $13 million (13 percent).
• Appropriated, on average, $2.8 million of fund balance that was not used.
• Did not use reserves in accordance with adopted budgets, overfunded two reserves by approximately $3.3 million, and did not use a debt reserve, with a balance of $8.3 million, to pay debt as required.

These practices resulted in real property tax levies that were higher than necessary.

Key Recommendations

• Adopt budgets that include reasonable estimates for appropriations, appropriated fund balance and reserves that will be used to fund operations.
• Properly use reserves and reduce overfunded reserves.

District officials did not agree with all of our findings. Appendix B includes our comment on issues raised in the District’s response.

1 Lancaster Central School District – Financial Condition (2016M-101)