Cincinnatus Central School District – Fund Balance and Reserves (2014M-191)

Issued Date
October 10, 2014

Purpose of Audit

The purpose of our audit was to evaluate the financial condition of the District for the period July 1, 2012 through April 17, 2014.

Background

The Cincinnatus Central School District provides education to children residing in eight towns in Cortland County, five towns in Chenango County and one town in Broome County. The District is governed by a seven-member Board of Education. The District operates one school which has about 645 students and 190 employees. The District’s general fund budgeted appropriations for the 2014-15 fiscal year is $14.6 million.

Key Findings

  • The District’s fund balance exceeded the statutory limit for two out of the last three years.
  • District officials adopted budgets that included plans to use fund balance totaling almost $1.5 million between the fiscal years ended 2010-11 and 2012-13. Instead, the District used less than $51,000 of this planned amount because the District overestimated expenditures by almost $1.8 million during the same period.
  • Between the fiscal years ended 2010 through 2013, District officials more than doubled the balances of the District’s reserves by setting aside an aggregate of $742,000 in additional money in the reserves.
  • The District’s multiyear plan did not include provisions for the use of reserves, including how and when disbursements should be made or optimal or targeted funding levels and why these levels are justified.

Key Recommendations

  • Ensure that the amount of the District’s unexpended surplus fund balance is in compliance with Real Property Tax Law statutory limits and reduce the amount of unexpended surplus fund balance in a manner that benefits District taxpayers. Such uses could include, but are not limited to, using surplus funds as a financing source, funding one-time expenditures or funding appropriate reserves.
  • Develop more realistic budgets based on prior year’s actual results and anticipated operations and avoid raising more real property taxes than necessary.
  • Review all reserve balances and transfer excess funds to unrestricted fund balance, where allowed by law, or other reserves established and maintained in compliance with statutory directives.
  • Develop and implement a comprehensive, multi-year financial strategy that includes realistic plans on the use of appropriated fund balance and the optimal or targeted funding and using of reserve funds.