Issued Date
November 23, 2022
Audit Objective
Determine whether the Port Jervis City School District (District) officials and Board of Education (Board) effectively managed the District’s general fund financial condition.
Key Findings
The Board and District officials did not effectively manage the District’s financial condition. As a result, the District levied more taxes than needed to fund operations. The Board and District officials:
- Consistently overestimated general fund appropriations by an average of $5.8 million each year from 2017-18 through 2020-21 and appropriated $4.8 million of fund balance that was not used.
- As of June 30, 2021, maintained a recalculated surplus fund balance totaling $23.6 million, exceeding the 4 percent statutory limit by 26 percentage points or $20.4 million. We project that the District will generate another operating surplus of approximately $9.3 million in 2021-22 and will not need to use $903,000 in appropriated fund balance.
- Made unbudgeted year-end transfers to reserves and the capital projects fund totaling $12.8 million and $15.5 million, respectively. As a result, officials did not present the District’s budget or fund balance in a transparent manner.
Key Recommendations
- Adopt realistic budgets and reduce surplus fund balance to comply with the statutory limit.
- Budget for the funding of reserves and capital projects rather than rely on unbudgeted transfers of year-end operating surpluses.
- Ensure that designated reserve funds are used to fund related expenditures.
District officials agreed with our recommendations and plan to take corrective action. Appendix B includes our comment on the District’s response.