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Audit Objective

Determine whether the Board and District officials adopted realistic budgets and effectively managed fund balance and reserves.

Key Findings

The Board and District officials:

• Adopted conservative budgets that resulted in circumventing the statutory limit on surplus fund balance by making $2.4 million in unbudgeted year-end transfers to reserves and appropriating $1.6 million in fund balance that was not used.
• Annually increased meal prices, despite repeated warnings from its external auditor that the school food service surplus fund balance was excessive.
• Overfunded two general fund reserves with balances totaling more than $1.3 million as of June 30, 2018.

Key Recommendations

• Develop and adopt budgets that include more realistic estimates for revenues and appropriations and the amount of fund balance and reserves that will be used to fund operations.
• Develop a plan to continue reducing the school food service fund balance to a reasonable level.
• Review and fund reserve balances to reasonable levels in accordance with applicable statutes.

District officials generally disagreed with our findings and recommendations. Appendix B includes our comments on issues raised in the District’s response letter.