Audit Objective
Determine whether the Delaware Academy Central School District at Delhi (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. The Board and officials’ consistent practice of appropriating fund balance that is not needed and maintaining unreasonable reserve balances circumvents the statutory limit on surplus fund balance and resulted in a real property tax levy that was higher than needed to fund operations. From the 2020-21 through 2022-23 fiscal years, the Board and District officials:
- Overestimated budgetary appropriations by a total of $5 million (8.6 percent) and developed budgets that appropriated fund balance to address planned budget gaps totaling approximately $2.5 million. However, the District realized operating surpluses totaling approximately $3.2 million and the planned budget gaps were not realized.
- Reported a surplus fund balance that exceeded the statutory limit by $2.2 million, or 10.4 percentage points, as of June 30, 2023.For perspective, the recalculated surplus fund balance as of June 30, 2023 exceeded the limit by $6.3 million or 29.5 percentage points.
- Improperly held $3.25 million in a debt reserve and maintained an unemployment insurance reserve with a reported balance of $267,320 that could fund 22 full-time employees’ unemployment expenditures for the maximum benefit.
Key Recommendations
- Adopt realistic budgets and reduce both surplus fund balance to comply with the statutory limit and overfunded reserves in a manner that benefits taxpayers.
District officials disagreed with certain aspects of our findings but indicated they will initiate corrective action. Appendix B includes our comments on the District’s response letter.