Afton Central School District – Fund Balance Management (2023M-18)

Issued Date
June 16, 2023

Audit Objective

Determine whether the Afton Central School District (District) Board of Education (Board) and officials effectively managed fund balance.

Key Findings

The Board and District officials did not effectively manage the District’s fund balance. As a result, they levied more taxes than needed to fund operations and were not transparent with taxpayers.

  • The Board annually overestimated appropriations from fiscal years 2019-20 through 2021-22 by an average of $1.1 million or 7 percent.
  • Surplus fund balance exceeded the 4 percent statutory limit in each of the last three fiscal years by approximately $2.9 million (17.5 percentage points) to $5.6 million (31.5 percentage points).
  • The Board unnecessarily appropriated fund balance that was not needed, which in effect is a reservation of fund balance that is not provided by statute and circumvents the statutory limit.
  • The District incurred $63,561 in unnecessary interest and other associated costs for the issuance of bond anticipation notes (BANs) to purchase school buses.

Key Recommendations

  • Adopt realistic budgets and appropriate fund balance only when needed to fund operations.
  • Reduce surplus fund balance to comply with the statutory limit in a manner beneficial to taxpayers.
  • Perform a cost-benefit analysis and evaluate the financial impact of debt issuance versus using surplus fund balance on District operations.

District officials agreed with our recommendations and indicated they will take corrective action.