Audit Objective
Determine whether the Sherburne-Earlville 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. As a result, real property tax levies were higher than needed to finance actual expenditures. By continually overestimating appropriations year after year, the Board and District officials are not presenting the District’s spending plan in a transparent and meaningful manner to taxpayers. In addition, the Board did not adopt a reserve policy to define its rationale for establishing reserve funds, maximum targeted funding levels and the conditions under which reserves will be used or replenished.
From 2020-21 through 2022-23, the Board and District officials:
- Overestimated appropriations by a total of $8 million (7 percent) and appropriated $2.5 million of fund balance that was not needed while generating operating surpluses totaling $1.7 million.
- Allowed surplus fund balance to exceed the statutory limit by $4.2 million, or 11 percentage points.
- Maintained unreasonably high balances or did not use reserve balances to pay related expenditures in three of the District’s seven reserves.
Recommendations
The audit report includes four recommendations to help the Board and District officials improve their financial management practices. Except as noted in Appendix A, District officials generally agreed with our findings. Appendix B includes our comments on the District’s response.