Audit Objective

Determine whether the Thousand Islands 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. As a result, officials have withheld funds from productive use and may have missed opportunities to reduce the tax levy.

The Board and District officials:

• Overestimated appropriations by $9.7 million (11.6 percent) between the 2017-18 and 2020-21 fiscal years and appropriated fund balance totaling $6.1 million that was not needed.
• Reported fiscal year-end surplus fund balance ranging from $2.4 to $3 million (10.3 to 12.8 percent) of the next year’s budget (during the same period), which exceeded the 4 percent statutory limit by $1.4 to $2.1 million.
• Improperly funded a tax certiorari reserve by $304,641 and did not use a debt reserve, with a balance of approximately $1 million, to pay debt-service costs during the 2019-20 and 2020-21 fiscal years as required.

Key Recommendations

• Adopt budgets that include reasonable estimates for appropriations and appropriated fund balance.
• Reduce surplus fund balance to comply with the statutory limit.
• Return improperly restricted funds to the general fund and use the debt reserve to pay debt-service costs as required.

District officials generally agreed with our recommendations and have initiated or indicated they planned to initiate corrective action. Appendix C includes our comments on issues raised in the District’s response letter.