Audit Objective

Determine whether the Brocton 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, the Board and District officials were not transparent with taxpayers and levied more taxes than necessary to fund operations. The Board and District officials:

• Overestimated budgetary appropriations by an annual average of $1.3 million (8 percent) and allowed surplus fund balance to exceed the statutory limit as of June 30, 2022 by 7 percentage points or $1.2 million.
• Could not demonstrate that six reserves with balances totaling more than $2.2 million were funded or used as management intended.
• Did not establish a comprehensive reserve fund policy or develop annual reserve reports.

Key Recommendations

• Adopt budgets that include reasonable estimates for appropriations and reserves that will be used to fund operations.
• Reduce surplus fund balance to comply with the statutory limit.
• Reduce overfunded reserves in accordance with applicable statutes.

District officials generally agreed with our recommendations and indicated they planned to initiate corrective action. Appendix B includes our comment on issues District officials raised in their response.