Audit Objective 

Determine whether the Lyme Central School District (District) Board of Education (Board) and District officials properly managed fund balance. 

Key Findings 

The Board and District officials did not properly manage the District’s fund balance. As a result, they levied more taxes than needed to fund operations and were not transparent with taxpayers. The Board and District officials: 

• Overestimated budgetary appropriations by an annual average of $918,000 (12 percent) from 2020-21 through 2022-23. 
• Appropriated fund balance to close projected budget gaps totaling $1.6 million for the 2020- 21 through 2022-23 fiscal years; however, the District only needed to use approximately $23,000 of appropriated fund balance to cover operating costs during the period. 
• Reported fiscal year-end surplus fund balance during the same period ranging from 16 to 19 percent of the upcoming year’s budget, which was $1.0 million to $1.4 million over the 4 percent statutory limit. 
• Did not have written multiyear financial and capital plans to provide a framework for developing the annual budgets and addressing future operating and capital needs. 

Recommendations 

The audit report includes three recommendations that, if implemented, will improve the District’s financial management.

District officials disagreed with certain aspects of our findings but indicated they will initiate corrective action. Appendix B includes our comments on the District’s response letter.