Determine whether the Bayport-Blue Point Union Free School District (District) Board appropriately managed the District’s fund balance.
The Board did not appropriately manage the District’s fund balance, overstated budgeted appropriations and improperly backdated encumbrances. The Board also improperly established and funded reserve accounts.
- On average, the Board annually appropriated $2.4 million of fund balance that was not needed to pay operational expenses because operating surpluses of about $1 million were realized.
- When unused appropriated fund balance is added to the surplus fund balance, the recalculated surplus fund balance exceeded the statutory limit each year ranging from $1.9 million to $3.7 million or 2.5 to 4.9 percentage points.
- Although we informed officials of the excess fund balance during our audit fieldwork, this pattern continued in the 2021-22 budget.
Annually appropriating fund balance that is not needed to finance operations is, in effect, a reservation of fund balance not provided for by statute, resulting in higher than necessary tax levies.
- Discontinue appropriating fund balance that is not needed and adopt realistic budgets.
District officials disagreed with certain aspects of our findings and recommendations but indicated they have initiated corrective action. Appendix B includes our comments on issues raised in the District’s response letter.