Determine whether the Board adopted realistic budgets and took appropriate action to address the reasonableness of fund balance and reserves.
- The Board annually appropriated fund balance that was not used to finance operations and adopted budgets that overestimated appropriations by a total of approximately $3 million (13 percent) from 2014-15 through 2016-17.
- District officials improperly restricted nearly $1.2 million in a debt reserve in the debt service fund from 2014-15 through 2016-17, which made it appear that unrestricted fund balance was within the statutory limit each year. When these funds are added back to the general fund, recalculated unrestricted fund balance exceeded the 4 percent limit each year by 12 to 14 percentage points.
- Reserve funds are generally not being used as intended.1 Three reserves are overfunded and one reserve appears to be unneeded.
- Adopt budgets that include reasonable estimates for appropriations and the amount of fund balance that will be used to fund operations.
- Reduce unrestricted fund balance to within the statutory limit and use the excess funds in a manner more beneficial to taxpayers.
- Review and fund reserve balances to reasonable levels in accordance with applicable statutes.
District officials disagreed with certain aspects of our findings and recommendations, but indicated they planned to initiate some corrective action.
1 With the exception of the unemployment and capital reserves