Audit Objective
Determine whether the Caledonia-Mumford Central School District (District) Board of Education (Board) and District officials effectively managed fund balance.
Key Findings
The Board and District officials did not effectively manage fund balance, the difference between revenues and expenditures accumulated over time. As a result, the District’s surplus fund balance is two times the statutory limit, District officials were not transparent with taxpayers and more real property taxes were levied than necessary to fund operations. In the 2020-21 through 2022-23 fiscal years included in our audit period:
- The Board-adopted budgets made it appear the District would have budget deficits requiring fund balance to be appropriated and real property taxes to be increased. However, the District had operating surpluses totaling $5.1 million. Appropriating unneeded fund balance circumvents the statutory limit.
- Three general fund reserves totaling $1.4 million were not necessary or reasonably funded and the debt reserve in the debt service fund had $337,777 in unidentified money that should be returned to the general fund. For example, officials increased the unemployment reserve to $888,580 as of June 30, 2023, a 310 percent increase over the three years and sufficient to fund applicable expenditures for about 500 years.
- District officials overstated the District’s outstanding future financial commitments by a total of $1.3 million over the three years, which made it appear the District had less surplus fund balance.
- The District did not develop or adopt a written multiyear capital plan, comprehensive multiyear financial plan or reserve plan. This inhibited effective financial management and did not provide adequate justification for the levels of accumulated fund balance including reserves.
Recommendations
The audit report includes seven recommendations to help the Board and District officials improve their financial management practices.
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.