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NYS Comptroller

THOMAS P. DiNAPOLI

Audits of Local Governments and School Districts

Lackawanna City School District – Financial Condition (2014M-119)


Released: August 8, 2014 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was was to assess the District’s financial condition for the period July 1, 2012 through March 31, 2014.

Background

The Lackawanna City School District is located in the City of Lackawanna, Erie County and is governed by the Board of Education which comprises seven elected members. The District operates four schools with approximately 1,700 students. The District’s general fund budgeted appropriations for the 2013-14 fiscal year are $47 million.

Key Findings

  • For the last four years, the Board and District officials consistently overestimated expenditures by an average of $3.1 million, totaling over $12.4 million.
  • The District had an unexpended surplus funds deficit of $1.4 million at the end of the 2012-13 fiscal year due to operating deficits over multiple years.
  • Because the District will have exhausted all its unexpended surplus funds, a slight timing difference in cash inflows and outflows could result in cash constraints forcing the District to rely on short-term borrowings.
  • District officials do not prepare cash flow statements and therefore cannot assess the District’s ability to generate sufficient cash inflow to meet its obligations in a timely manner.
  • The Board and District officials have not yet developed a multiyear financial plan.

Key Recommendations

  • Adopt structurally balanced budgets that fund recurring expenditures with recurring revenues.
  • Reduce reliance on fund balance as a financing source and continue to evaluate and explore ways to cut costs and increase revenues.
  • Develop a realistic plan to accumulate unexpended surplus funds, within the legal limit, so that the District is prepared for unexpected expenditures or revenue shortfalls.
  • Prepare cash flow statements to ensure the District has sufficient cash inflows to pay its obligations in a timely manner.
  • District officials should develop, and the Board should implement, a multiyear financial plan to provide a framework for future budgets and facilitate management of the District’s financial operations. The plan should be updated annually.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236