Audit Objective 

Determine whether the Falconer 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. Although our 2009 and 2016 audits identified similar deficiencies, officials did not implement corrective action. As a result, the Board and District officials’ budgeting practices resulted in the District levying more real property taxes than needed, a significant accumulation of surplus fund balance in excess of the statutory limit and missed opportunities to lower real property taxes. The continued practice of overestimating appropriations and appropriating fund balance that will not be used to finance operations as a means to accumulate surplus funds in excess of the legal limit or to provide a funding source for capital projects without voter approval is misleading and continues to further diminish the transparency of the District’s budgeting process and the reliability of the Board and District officials. The Board and District officials: 

• Allowed surplus fund balance to exceed the statutory limit as of June 30, 2023 by 20 percentage points, or $6.1 million.
• Consistently overestimated budgetary appropriations by an annual average of $3.7 million (17 percent).
• Could not demonstrate that three reserves with balances totaling more than $4 million were properly maintained or reasonably funded.

Key Recommendations 

The audit report includes six recommendations that, if implemented, will improve the District’s budgeting practices.

District officials generally agreed with our findings and indicated they will initiate corrective action.