Audit Objective
Did the Blue Point Fire District (District) Board of Fire Commissioners (Board) effectively manage fund balance and reserve funds?
Audit Period
January 1, 2019 – December 31, 2024
Understanding the Audit Area
Fund balance should be effectively managed to ensure financial stability, maintain essential services and be transparent with taxpayers. Effective management helps protect a fire district from unforeseen financial risks, helps maintain a favorable credit rating, and enables long-term financial planning. Fund balance is a key measure of a fire district’s financial condition and represents the difference between revenues and expenditures accumulated over time. Fire districts may also establish reserve funds to save for future projects, acquisitions and other allowable purposes.
The District’s budgeted appropriations for fiscal year 2025 totaled $1.6 million and capital reserve fund balances totaled $1.6 million as of December 31, 2024.
Audit Summary
The Board did not effectively manage fund balance and capital reserve funds. Because the Board did not adopt budgets with reasonable estimates or have a fund balance and reserve fund policy, the Board’s intentions regarding fund balance were not clear, reserves may have been overfunded, and real property tax levies may have been higher than necessary. As a result, the Board’s financial management practices were not transparent, and taxpayers were not properly informed on how District funds were being used or reserved.
From 2019 through 2024, the Board adopted budgets that resulted in a total operating surplus of $3.4 million. The Board consistently overestimated expenditures, resulting in budget variances in the six fiscal years reviewed totaling $1 million (25 percent) of the $5.2 million in budgeted appropriations. Expenditure variances exceeded 20 percent in 2020 through 2024, with the highest variance totaling $374,641 (47 percent) in 2024. As a result, the District’s tax levy increased from $1.1 million in 2019 to $1.5 million in 2024 to fund operations and add to reserves, meaning that real property taxes may have been higher than necessary.
Additionally, the Board did not develop and adopt a fund balance and reserve fund policy to address optimal funding levels, how the reserves are funded or when reserves should be used. As a result of the operating surpluses, District officials transferred $2.4 million to the District’s four capital reserve funds between 2019 and 2024, approximately $600,000 more than the $1.8 million the Board budgeted to transfer to the reserve funds over the same period.
The report includes five recommendations that, if implemented, will improve the Board’s ability to effectively manage fund balance and capital reserve funds. District officials agreed with our recommendations but disagreed with certain aspects of the report and their response is included in Appendix B. Our comments on the District’s response are included in Appendix C.
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 Board has the responsibility to initiate corrective action. Pursuant to Section 181-b of New York State Town Law, a written corrective action plan (CAP) that addresses the findings and recommendations in this report must be prepared and forwarded to our office within 90 days. To the extent practicable, implementation of the CAP must begin by the end of the next fiscal year. 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 Board to make the CAP available for public review.