Audit Objective

Determine whether the Sandy Creek Central School District (District) Board of Education (Board) and District officials properly managed reserve funds.

Key Findings

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

• The employee benefit accrued liability reserve (EBALR) was significantly overfunded, and over $1.2 million was improperly transferred from the reserve.
• $136,208 was improperly transferred to the debt reserve in the debt service fund even though it was not required to be restricted for debt payments.
• $244,418 was transferred to the retirement contribution reserve without Board authorization.
• Although the Business Administrator developed a reserve fund plan, it was outdated and has not been adopted by the Board.

Key Recommendations

• Ensure the EBALR is only used for allowable expenditures.
• Transfer funds improperly maintained in the debt service fund to the general fund.
• Obtain Board approval for transfers to reserves.
• Update and adopt a written reserve plan and periodically review reserve balances to help ensure the amounts are reasonable.

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