Sweet Home Central School District – Financial Management (2022M-166)

Issued Date
March 31, 2023

Audit Objective

Determine whether the Sweet Home Central School District’s (District) Board of Education (Board) and District officials properly managed fund balance and reserve funds.

Key Findings

District officials did not properly manage fund balance. They improperly encumbered funds and improperly restricted surplus funds in a debt reserve. As a result, District officials were not transparent with taxpayers and maintained real property taxes at a level higher than necessary to fund operations.

  • Recalculated surplus fund balance exceeded the statutory limit by $7.2 million including $2.8 million which was improperly restricted in a debt reserve as of June 30, 2021.
  • The Board unnecessarily appropriated $2.4 million of fund balance each year and real property taxes were increased by $4.5 million or 9.7 percent during the audit period.
  • Appropriations were overestimated by $13.4 million and sales tax revenue was underestimated by $3.4 million from 2018-19 to 2021-22.
  • At least $1.7 million was improperly encumbered which reduced the District’s surplus fund balance.

Key Recommendations

  • Comply with the surplus fund balance statutory limit.
  • Adopt realistic budgets and ensure encumbrances are valid.

District officials generally disagreed with our recommendations but indicated they planned to initiate corrective action. Appendix B includes our comments on issues raised in the District’s response.