Audit Objective 

Determine whether the Long Beach City School District’s (District) Board of Education (Board) and District officials effectively managed the District’s fund balance. 

Key Findings 

The Board and District officials did not effectively manage the District’s fund balance and did not present the District’s spending plans in a transparent manner. While real property tax levies remained the same since 2020-21, the District’s budgeting practices resulted in tax levies being higher than necessary. The Board and officials: 

• Reported surplus fund balance that exceeded the statutory 4 percent limit in three of the four years reviewed by as much as 5 percentage points. 
• Transferred a total of $17.3 million of the general fund’s excess fund balance at the end of two of the four fiscal years reviewed to the capital projects fund; however, this was not clearly stated in annual budget documents for voter approval. Prior to the non-transparent and unbudgeted fiscal year-end transfers that totaled about $13.4 million, the surplus fund balance exceeded the statutory limit by as much as 9 percentage points. 
• Overestimated appropriations by an average of approximately $2.5 million annually and underestimated revenues by an average of $1.6 million annually for a three-year period. 
• Adopted budgets that appropriated fund balance, which gave taxpayers the impression the District would have an operating deficit. Instead, the District realized operating surpluses ranged between $1.7 million and $4.1 million, totaling more than $8.5 million for a three-year period. 

Key Recommendations 

• Develop budgets that include reasonable estimates for revenues and appropriations that will be used to fund operations. 
• Discontinue the practice of appropriating fund balance that is not needed or used to fund operations. 

District officials disagreed with certain aspects of our findings. Appendix B includes our comments on issues raised in the District’s response.