Audit Objective
Determine whether Central Square Central School District (District) officials accurately reported fund balance, maintained surplus fund balance within the statutory limit and maintained reserve funds at reasonable levels.
Key Findings
District officials did not accurately report the District’s surplus fund balance, maintain surplus fund balance within the statutory limit or maintain all reserve funds at reasonable levels. As a result, officials reduced the transparency of District finances and kept $8 million from productive use. Although the District had relatively modest property tax increases each year, the increases may not have been necessary, considering the amount of excess surplus funds retained.
- The District’s surplus fund balance exceeded the statutory limit by about $8 million (9.2 percentage points) as of June 30, 2021. While officials reported that the District’s surplus fund balance exceeded the legal limit by $1.6 million, officials also overstated accrued liabilities, nonspendable fund balance and encumbrances, which resulted in surplus fund balance being underreported by about $6.4 million.
- Officials could not provide us with evidence that the Board properly established the employee benefit accrued liability reserve. As of June 30, 2021, the reserve had a balance of $3.6 million that exceeded the liabilities eligible to be paid from the reserve by $1.5 million.
Key Recommendations
- Accurately report surplus fund balance.
- Comply with the statutory surplus fund balance limit.
District officials generally agreed with our recommendations and indicated that they planned to initiate corrective action.