Audit Period
December 31, 2020 – December 31, 2023.
We extended our audit period to November 12, 2024 to analyze the 2025 adopted budget.
Audit Objective
Did the Town of Sherburne (Town) Board (Board) develop realistic budgets?
Understanding the Program
A realistic budget begins with sound estimates and well-supported budgetary assumptions. Budgets should be based on historical data or known trends, in which recurring revenues finance recurring expenditures. This helps the Town to not levy more taxes than necessary.
The Town has five funds which include the four main operating funds, which are the general fund town-wide (TW), highway fund TW, general fund town-outside-village (TOV) and highway fund TOV. The Town’s 2024 budgeted appropriations were as follows:
- General fund TW: $504,700
- Highway fund TW: $615,300
- General fund TOV: $70,600
- Highway fund TOV: $519,700
The TW funds are funded primarily by real property taxes, while the general fund TOV is funded primarily by real property taxes and sales tax, and the highway fund TOV is funded primarily by sales tax and Consolidated Local Street and Highway Improvement Program (CHIPS) revenues.
Audit Summary
The Board adopted unrealistic budgets. The budgets underestimated revenues and overestimated expenditures. In addition, officials appropriated fund balance to balance the budgets because purported revenues were not sufficient to fund operations. However, operating surpluses occurred which resulted in an unplanned increase in fund balance. Furthermore, the Board did not have written multiyear capital or financial plans or a written fund balance or reserve policy in place to guide the Board’s decisions regarding appropriate fund balance and reserve fund levels. As a result, more taxes may have been levied than were needed to fund the Town’s operations.
During the audit period, the Board adopted budgets for the general fund TW, highway fund TW and highway fund TOV which underestimated revenues by approximately $3.4 million and appropriations by $1.9 million combined. Additionally, the Board appropriated $511,000 of fund balance which was not needed. More specifically, we determined the following:
- The Board adopted budgets which underestimated revenues in total by $3.1 million for the highway fund TOV and $257,000 for the general fund TW.
- The Board also adopted budgets which underestimated appropriations by $2.3 million for the highway fund TOV and overestimated appropriations by $335,000 for the highway fund TW and $200,0001 for the general fund TW.
- Unrealistic budget estimates resulted in an unplanned operating surplus totaling $1.2 million2 while the Board planned for operating deficits totaling $511,000. As a result, none of the appropriated fund balance was needed.
- Unrestricted fund balance increased by $887,000, and without written multiyear capital or financial plans, taxes may have been levied unnecessarily.
The report includes five recommendations that, if implemented, will improve the Town’s budgeting process. Town officials agreed with our recommendations and indicated that they have initiated or plan to initiate corrective action.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. Our methodology and standards are included in Appendix C.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of General Municipal Law. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make the CAP available for public review in the Town Clerk’s office.
1 Net total
2 Ibid.