Audit Objective
Did Steuben County (County) officials effectively manage the County’s fund balance?
Audit Period
January 1, 2021 – July 31, 2025.
We extended the audit period back to 2014 to review fund balance and reserve balances reported in annual financial reports.
Understanding the Audit Area
A key measure of a county’s financial condition is its level of fund balance, which represents the difference between revenues and expenditures accumulated over time. Maintaining a reasonable amount of unrestricted fund balance within operating funds is an important financial consideration for county officials because it is available for appropriation to reduce taxes, fund one-time expenditures and other uses. Combining a reasonable level of unrestricted fund balance with specific legally established reserve funds provides resources for both unanticipated events and other identified or planned needs, such as future infrastructure and equipment needs.
The County Legislature (Legislature) is responsible for the general management and control of the County’s financial affairs, which includes adopting and monitoring the annual budget, developing written multiyear financial and capital plans, and establishing financial policies, such as fund balance and reserve policies. The Commissioner of Finance is the chief fiscal officer, and the County Manager is the chief executive officer and budget officer.
The County’s two main operating funds are the general and road funds, for which 2025 appropriations totaled $213.7 million and $29.2 million, respectively. As of December 31, 2024, the general and road funds had unrestricted fund balances that totaled $118.9 million. The general and road funds are primarily funded by sales tax (general fund only), State and federal aid and real property taxes. The general fund also reported six reserve funds with balances totaling nearly $6 million.
Audit Summary
County officials did not effectively manage the County’s fund balance. As a result, as of December 31, 2024, the County maintained unrestricted fund balance in the general fund totaling $103.4 million (48 percent of the upcoming year’s budget) and in the road fund totaling $15.5 million (53 percent of the upcoming year’s budget). The Legislature did not adopt an adequate fund balance policy or develop and adopt comprehensive, written multiyear financial or capital plans. An adequate fund balance policy would have assisted the County Manager, Legislature and County officials in developing and adopting realistic budgets and planning for the County’s financial future. In addition, the Legislature’s and County officials’ budgeting practices diminished the transparency of County finances to the taxpayers and residents. For example, over the last four calendar years 2021 through 2024, the Legislature authorized unbudgeted transfers totaling $36.6 million, which, in effect, reduced the reported operating surpluses.
After our initial audit discussions with County officials, the Legislature updated its administrative code to add a maximum general fund balance goal to its fund balance policy and adopt a reserve fund policy. The Legislature also created and funded new reserves in July 2025 to significantly reduce its unrestricted fund balance.
The report includes eight recommendations that, if implemented, will improve the County’s financial management. County officials generally disagreed with our findings but indicated they have begun initiating corrective action. Appendix C includes our comments on the County’s response.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. Our methodology and standards are included in Appendix D.
The Legislature has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of the New York State General Municipal Law. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Legislature to make the CAP available for public review.