Audit Objective

Determine whether the Attica 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 reserves. Officials’ practices of appropriating fund balance and reserves that are not needed circumvents the statutory limit on surplus fund balance and lacks transparency. The Board and District officials:

• Consistently appropriated fund balance and reserves that were not actually needed to fund operations.
• Overestimated budgetary appropriations by an annual average of $2.7 million (10 percent).
• Maintained four reserves totaling $2.4 million without demonstrating they were reasonable, needed or necessary; improperly restricted more than $3.5 million in a debt reserve; and overfunded the unemployment insurance reserve.
• Did not fully implement our 2016 audit recommendations addressing overfunded reserves.

Key Recommendations

• Adopt budgets that include reasonable estimates for appropriations, appropriated fund balance and reserves that will be used to fund operations.
• Return improperly restricted funds to general fund surplus fund balance.

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