Audit Objective 

Determine whether Hammondsport Central School District (District) officials established comprehensive multiyear financial and capital plans. 

Key Findings 

District officials did not develop comprehensive written multiyear financial and capital plans, and their budgeting practice of consistently appropriating $1.4 million in fund balance over these three fiscal years that is not needed to finance operations is, in effect, a reservation of fund balance that is not provided for by statute and a circumvention of the 4 percent statutory limit imposed on the level of surplus fund balance that may be maintained. As a result: 

• District officials maintained surplus fund balance levels at more than three times the 4 percent allowed by New York State Real Property Tax Law Section 1318. 
• Five reserves totaling $2.3 million had balances in excess of the District’s needs totaling $1.4 million.

In addition, while District officials prepared an annual reserve and fund balance plan each January, the plan lacked key pieces of information required by the Board’s reserve policy and best practices. Specifically, the annual reserve and fund balance plan did not include: the maximum funding goal or annual contributions for each reserve; gains or losses on the sale of investments or detail the total interest earned; permitted uses of excess reserve funds; or an analysis of the projected needs of reserve funds in the upcoming year(s). 

Recommendations 

The audit report includes four recommendations to help improve the District’s multiyear planning. 

Except as noted in Appendix A, the District generally agreed with our recommendations. Appendix B includes our comments on the District’s response.