Jamestown City School District – Fund Balance and Reserves (2022M-97)

Issued Date
September 23, 2022

[read complete report - pdf]

Audit Objective

Determine whether the Jamestown City School District (District) Board of Education (Board) and District officials properly managed fund balance and reserves.

Key Findings

The Board and District officials did not properly manage fund balance and reserves and need to improve their budgeting practices and transparency with District residents and taxpayers. The Board and District officials:

  • Maintained surplus fund balance in excess of the 4 percent statutory limit and annually appropriated fund balance that was not used to fund operations. As of June 30, 2021, surplus fund balance exceeded the statutory limit by 7 percentage points or $6.3 million.
  • Overestimated budgetary appropriations by an annual average of $6.5 million (8 percent), which resulted in annual operating surpluses and increased fund balance by $9.2 million, or 72 percent, over the last three fiscal years.
  • Could not demonstrate that the balances in five reserves, totaling approximately $8.7 million, were reasonable and lacked a sufficient reserve fund plan that detailed each reserve’s funding and use.

As a result, more real properly taxes were levied then necessary to fund operations.

Key Recommendations

  • Adopt budgets that include reasonable estimates for appropriations, appropriated fund balance and reserve funds that will be used to fund operations.
  • Comply with the surplus fund balance statutory limit.
  • Reduce overfunded reserves in accordance with applicable statute.

District officials generally agreed with our recommendations and indicated they plan to initiate corrective action.