Audit Objective 

Determine whether the Village of Mexico (Village) Board of Trustees (Board) adopted realistic budgets and managed fund balance. 

Key Findings 

The Board did not adopt realistic budgets or manage fund balance. As a result, more taxes were levied than needed to fund operations. For the four fiscal years reviewed (2019-20 through 2022-23), the Board: 

• Did not establish a fund balance policy and maintained an excessive level of unassigned surplus fund balance in the general fund; balances ranged between $839,530 and $1.1 million, or between 109 and 124 percent of the ensuing year’s budget. 
• Did not consider historical or known trends of revenues and expenditures when developing the budgets. As a result, revenues were underestimated by a total of $439,767 and expenditures were overestimated by a total of $287,238 for the audit period.
• Appropriated fund balance of $216,780 that was not needed to fund operations due to operating surpluses. This practice contributed to the accumulation of surplus fund balance. 

Additionally, the property tax levy for 2023-24 was $509,000 while the Village had over $1.1 million in surplus funds available at the end of 2022-23 to use toward supplementing next year’s budget. 

Key Recommendations 

• Adopt a fund balance policy and realistic budgets based on historical trends and maintain a reasonable fund balance level. 

Village officials agreed with our recommendations and indicated they will take corrective action.