[read complete report – pdf]

Audit Objective

Determine whether the Norwood-Norfolk Central School District (District) Board of Education (Board) and District officials properly managed fund balance and reserves.

Key Findings

The Board and District officials did not properly manage fund balance and all reserves. The Board and District officials:

• Allowed surplus fund balance to exceed the 4 percent statutory limit. As of June 30, 2021, surplus fund balance was $1.7 million, $0.7 million or 2.9 percentage points over the limit. Surplus fund balance must be used to reduce the upcoming fiscal year’s real property tax levy or to fund needed reserves.
• Maintained $3 million in the New York State and Local Retirement System (NYSLRS) reserve fund, which is enough to fund average retirement expenditures for 10 years. This balance exceeds the Board’s targeted funding level range by $1.6 million to $2.1 million.
• Did not use $0.9 million restricted in a debt reserve to pay related debt as required.

Key Recommendations

• Reduce surplus fund balance to comply with the statutory limit.
• Ensure the NYSLRS reserve fund is reduced to a reasonable level.
• Use funds restricted in the debt reserve to make related debt payments as required.

District officials generally agreed with our recommendations and indicated they would take corrective action. Appendix B includes our comment on an issue raised in the District’s response.