Purpose of Audit

The purpose of our audit was to evaluate the Town’s budgeting practices for the period January 1, 2010 through April 30, 2013.

Background

The Town of Schaghticoke is located in Rensselaer County and has 7,679 residents. The Town is governed by an elected five-member Town Board, which comprises the Town Supervisor and four council members. The Town’s 2013 adopted budget appropriations totaled $4.1 million.

Key Findings

• The Board routinely relied on unexpended surplus funds to finance town-wide general, and certain water and sewer district operations, and continually adopted budgets that did not provide sufficient revenues to fund expenditures. As a result, unexpended surplus funds declined in the town-wide general fund, two water district funds and one sewer district fund. Town officials stated they appropriated unexpended surplus funds to keep the tax levy and user rates stable. However, this practice resulted in budgets that were not structurally balanced because they relied on unexpended surplus funds to finance recurring expenditures.
• The cost of operations is not sustainable based on the current levels of unexpended surplus funds maintained. As a result, Town officials may need to increase taxes and user fees if unexpended surplus funds are not available to finance operations in subsequent years.

Key Recommendations

• Address the declining fund balances in the town-wide general and water and sewer district funds and adopt future budgets with less dependence on using unexpended surplus funds to finance operations.
• Review the user fees and ad valorem taxes for the respective water and sewer districts annually and revise them, if necessary, to ensure that sufficient revenue is generated to cover their operating cost.