Determine whether the Merrick Union Free 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 the Board and District officials reduced surplus fund balance from 19 percent at June 30, 2015 to 8 percent as of June 30, 2023, they consistently appropriated fund balance that was not needed and overfunded reserves, primarily through transfers of surplus fund balance. These practices lack transparency, circumvent the statutory limit on surplus fund balance and can result in taxpayers being taxed more than necessary.

Specifically, the Board and District officials: 

• Overestimated appropriations by an annual average of $1.7 million (3.3 percent) and, as a result, 
• Consistently appropriated an average of $1.6 million of fund balance that was not needed. 
• Could not demonstrate that the unemployment insurance and repair reserves, with balances totaling $2.9 million, were reasonably funded. 

Key Recommendations 

• Continue reducing surplus fund balance to comply with the statutory limit.
• Adopt budgets that contain reasonable estimates of appropriations and fund balance that will be used to fund operations. 
• Maintain reserves at reasonable levels. 

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