New York State Comptroller Thomas P. DiNapoli today announced the following school district audits have been issued.
The board did not adopt an online banking policy. Employees accessed nonbusiness websites although it is prohibited by district policy. In addition, district officials did not provide Information Technology (IT) security awareness training to users. Sensitive IT control weaknesses were communicated confidentially to officials.
The district’s general fund balance increased by $12.9 million (141 percent) from 2015-16 through 2018-19, due to appropriations being overestimated by an average of $5.1 million (4.7 percent) per year. Over the last four fiscal years, the district reported unassigned fund balance equal to 4 percent of the ensuing year’s appropriations. However, when unused appropriated fund balance is added back, unassigned fund balance exceeds the statutory limit by up to 4.2 percentage points.
The district’s financial condition significantly declined due to a successful tax certiorari challenge. As a result, unrestricted fund balance as of June 30, 2019 totaled less than 1 percent of the next year’s appropriations. Based on the district’s outstanding tax certiorari liability of approximately $1.8 million, the district has an unfunded liability of approximately $873,000 as of July 31, 2019. District officials did not adopt a multiyear financial plan to address future unexpected revenue shortfalls or unanticipated expenditures.
District officials appropriated unrestricted fund balance as a financing source each year for the 2014-15 through 2018-19 budgets. Auditors found that only a fraction was used to finance operations, because the district generated operating surpluses in three of those years. After adding back the appropriated fund balance that was not used, the recalculated unrestricted fund balance for fiscal years 2014-15 through 2018-19 ranged from 7 percent to 12.15 percent of the ensuing year’s appropriations, exceeding the 4 percent statutory limit. Of the district’s six reserves, two were not used as intended and appear to be overfunded.
Surplus fund balance levels exceeded the statutory limit by at least 5.4 percentage points from fiscal years 2015-16 through 2018-19. Annual budgets overestimated appropriations by an average of $685,822 (6 percent) from 2015-16 through 2018-19. As a result, $1.7 million in appropriated fund balance was not used to fund operations during this time. In addition, the unemployment insurance reserve was overfunded and the employee benefit accrued liability reserve was not established by board resolution. Auditors also determined that district officials have not appropriately prepared or implemented corrective action plans (CAPs) to previous audits.
The board and district officials neglected to use accurate estimates of appropriations to balance the 2018-19 budget, which contributed to an unplanned operating deficit of $27.4 million. Auditors also determined that the board failed to adopt a structurally balanced budget and did not follow its fund balance policy when it appropriated fund balance to finance the 2018-19 budget. The district lacked a comprehensive multiyear financial plan and a comprehensive multiyear financial plan.
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