Le Roy Central School District – Reserve Funds (2022M-110)

Issued Date
September 30, 2022

[read complete report – pdf]

Audit Objective

Determine whether the Le Roy Central School District (District) Board of Education (Board) and District officials properly established and used reserve funds and maintained them at reasonable levels.

Key Findings

Although the Board and District officials properly established reserve funds that have balances totaling $3 million, they did not comply with the District’s reserve policy or transparently fund reserves. In addition, the Board did not take an active role in managing and overseeing reserve fund activity and did not transparently use or maintain all reserves at reasonable levels. The Board and District officials:

  • Established an inadequate reserve policy. The District’s reserve policy did not provide transparency or define the purpose, optimal funding level, and/or conditions under which reserves would be used and replenished.
  • Could not demonstrate that $2 million held in four reserves was reasonable or needed. For example, as of June 30, 2021, the unemployment insurance reserve totaled $658,000, enough to pay average annual unemployment expenditures for more than 200 years, and the employee benefit accrued liability reserve is overfunded by $426,000.

Key Recommendations

  • Adopt a comprehensive written reserve fund policy and comply with the policy.
  • Transparently fund reserves and maintain needed reserves at reasonable levels. District officials agreed with our recommendations and indicated they have initiated or planned to initiate corrective action.