Morris Central School District – Fund Balance Management (2023M-47)

Issued Date
July 28, 2023

[read complete report here - pdf]

Audit Objective

Determine whether the Morris Central School District (District) Board of Education (Board) and District 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 were not transparent with taxpayers and the District levied more taxes than needed to fund operations.

  • The Board overestimated appropriations from the 2019-20 through 2021-22 fiscal years by an average of $617,000, or 6 percent.
  • Surplus fund balance exceeded the 4 percent statutory limit in all three fiscal years by approximately $1.1 million (10.1 percentage points) to $2 million (21 percentage points).
  • Four of the District’s 10 reserves were not reasonably funded, or used to pay related expenditures, during the three fiscal years.

For example, the balance of $508,923 in the retirement contribution for employees reserve was sufficient to cover expenditures for at least four years.

Key Recommendations

  • Develop and adopt realistic budgets.
  • Reduce surplus fund balance to comply with the statutory limit in a manner that benefits taxpayers.
  • Develop a plan to reduce reserve balances to reasonable levels.

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