Determine whether the Cooperstown Central School District (District) Board of Education (Board) and District officials properly managed the District’s fund balance and reserves. 

Key Findings 

The Board and District officials did not properly manage fund balance and reserves. As a result, the Board and District officials were not transparent with taxpayers and levied more taxes than necessary to fund operations. From fiscal years 2020-21 through 2022-23, the Board and District officials: 

• Overestimated appropriations by a total of over $5.5 million and appropriated $2.6 million of fund balance that was not needed, while generating operating surpluses totaling approximately $3.2 million. Appropriating fund balance that is not needed artificially reduces the amount of surplus fund balance subject to the statutory limit, giving the appearance that surplus fund balance is closer to the statutory limit. 
• Improperly held $500,000 in a debt reserve that should have been returned to the general fund and maintained an unreasonably high balance in three of the District’s seven reserves. 
• Reported the 2022-23 surplus fund balance was in line with the statutory limit; however, we determined it exceeded the statutory limit by $2.3 million when including unused appropriated fund balance and funds improperly held in the debt reserve. 
• Did not transparently fund reserves through budgetary entries and could have used reserve funds to pay for related expenditures, but instead paid these expenditures with current years’ funds. 

Recommendations 

The audit report includes five recommendations which, if implemented, would improve the Board and District officials’ financial management practices.

District officials agreed with our recommendations and indicated they have begun to initiate corrective action.