Purpose of Audit

The purpose of our audit was to examine the District’s budgeting practices for the period July 1, 2012 through January 15, 2014.

Background

The Tri-Valley Central School District (District) is located in Sullivan and Ulster Counties, and is governed by the Board of Education which comprises nine elected members. There are two schools in operation within the District, with approximately 1,100 students and 210 employees. The District’s budgeted appropriations for the 2013-14 fiscal year were $30 million.

Key Findings

• The Board did not adopt reasonable budgets. Budgeted expenditures were significantly higher than needed. As a result, the District’s reported fund balance increased from approximately $8 million for the fiscal year ended 2009 to more than $14 million as of the fiscal year ended 2013.
• While it was prudent for District officials to plan for potential liabilities, they did not develop a plan for the use of the surplus funds. District administrators and the Board recognized the potential liability of expired collective bargaining agreements; however, the District ultimately did not have to pay any retroactive salary increases from the collective bargaining agreements and, therefore, experienced accumulated operating surplus of $5.3 million. In addition, if outstanding tax certiorari proceedings conclude in the District’s favor, the Board and administration may be faced with significant additional surplus funds.

Key Recommendations

• Develop realistic budgets that are consistent with the District’s actual revenues and expenditures, including funding reserves.
• Develop formal contingency plans for the use of surplus funds that may be available if potential liabilities are not realized.