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Audit Objective

Determine whether the Board and District officials properly managed fund balance and reserves.

Key Findings

• The Board annually appropriated fund balance that was not used to finance operations and overestimated appropriations by $3.3 million (6 percent annual average) from 2015-16 through 2017-18.
• As of June 30, 2018, unappropriated, unrestricted fund balance totaled $1.4 million and was almost 8 percent of 2018-19 appropriations, exceeding the 4 percent statutory limit by approximately $660,000 or 4 percentage points.
• Three reserve funds with combined balances of approximately $1.6 million as of June 30, 2018 were not being used as intended and were overfunded.

Key Recommendations

• Adopt budgets that include reasonable estimates for appropriations and the amount of fund balance that will be used to fund operations.
• Reduce unrestricted fund balance to within the statutory limit and use the excess funds in a manner more beneficial to taxpayers.
• Review and fund reserve balances to reasonable levels and use reserves in accordance with applicable statutes.

District officials agreed with our recommendations and indicated they planned to initiate corrective action.