Audit Objective
Determine whether the Gowanda 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 the District’s fund balance and reserves. The Board and District officials’ budgeting practices were not transparent and resulted in the District exceeding the statutory limit on surplus fund balance by $4.5 million, and missing opportunities to lower real property taxes. The Board and District officials:
- Consistently overestimated general fund appropriations from 2020-21 through 2022-23 by a total of $13.1 million and appropriated nearly $6.7 million of fund balance that was not needed or used. The continued practice of overestimating appropriations and appropriating fund balance that will not be used to finance operations as a means to accumulate surplus funds in excess of the legal limit is in effect a reservation of fund balance that artificially reduces the amount of surplus fund balance subject to the statutory limit and does not present the District’s spending plan in a transparent and meaningful manner to taxpayers.
- Adopted annual budgets during the same period that gave the impression that the District would have operating deficits totaling $6.7 million when it actually had operating surpluses totaling $9.9 million.
- Overfunded the employee benefit accrued liability and unemployment reserves by nearly $1.9 million and did not use funds held in six reserves with balances totaling $10 million.
Recommendations
The audit report includes seven recommendations to help the Board and District officials improve fund balance and reserve management.
District officials generally disagreed with our findings and recommendations. Appendix B includes our comments on issues raised in the District’s response.