[read complete report – pdf]

Audit Objective 

Determine whether the Avon Central School District (District) Board of Education (Board) and District officials effectively managed fund balance and reserves. 

Key Findings

The Board and District officials did not effectively manage fund balance and reserves. 

• The Board-approved budgets overestimated appropriations by an average of approximately $1.7 million per year which made it appear the District needed to appropriate $300,000 of fund balance each year and increase real property taxes to close budget gaps. However, the District incurred operating surpluses in all five years we reviewed, totaling $8.2 million. Appropriating fund balance that is not needed is, in effect, a reservation of fund balance that is not provided for by statute and circumvents the statutory limit. 
• Six reserves totaling over $5 million had high balances that were not needed or used. For example, the District’s reserve for unemployment expenditures will cover annual expenditures for 344 years and the debt reserve in the debt service fund had $866,000 in unidentified money that should be returned to the general fund. 
• The District lacked written multiyear financial and capital plans. This inhibited effective financial management and justification for the levels of accumulated fund balance and reserves. 

Recommendations

The audit report includes six recommendations to help improve the District’s financial management. 

District officials generally agreed with our recommendations and indicated they planned to initiate corrective action. Appendix B includes our comments on issues raised in the District’s response.