Audit Objective
Did the Lawrence Union Free School District (District) Board of Education (Board) and officials properly manage fund balance?
Audit Period
July 1, 2021 – June 30, 2025.
We extended our audit period back to July 1, 2019 to review real property tax trends and forward to October 30, 2025 to review the District’s 2024-25 fiscal year financial data.
Understanding the Audit Area
A key measure of a school district’s financial condition is its level of fund balance, which represents the difference between revenues and expenditures accumulated over time. School district officials must manage fund balance to ensure long-term educational stability, provide a cash flow cushion for unexpected costs (like emergencies and revenue gaps), maintain tax rate stability, comply with the 4 percent surplus fund balance1 limit, and avoid excessive reserves that burden taxpayers, all while ensuring funds are used for genuine needs rather than sitting underutilized. Proper management helps ensure resources meet student needs while maintaining financial health.
The District’s 2024-25 fiscal year general fund total appropriations were approximately $102 million. As of June 30, 2025, general fund surplus fund balance totaled $3.2 million.
Audit Summary
The Board and District officials did not properly manage fund balance. For the 2021-22 through 2023-24 fiscal years, the District’s reported surplus fund balance ranged from approximately 7 to 15 percent of the upcoming year’s budget, which was $3.5 million to $11.1 million over the 4 percent statutory limit. The District did not exceed the statutory limit for the 2024-25 fiscal year primarily due to an unbudgeted $15 million transfer to the capital projects fund, as reported in the District’s annual financial report submitted to the New York State Education Department2 for the 2024-25 fiscal year.
Additionally, for the 2021-22 through 2023-24 fiscal years, the Board adopted budgets that annually overestimated appropriations by an average of $9.4 million per year, or a cumulative total of approximately $28.2 million (10 percent), after adjusting for unplanned transfers. The majority of the overestimated appropriations were for instruction, health insurance benefits and special education services totaling $17 million. By maintaining surplus fund balance at more than the statutory limit, District officials are withholding funds from productive use.
The report includes two recommendations that, if implemented, will improve the District’s financial management. District officials generally agreed with our recommendations. Appendix C includes our comment on an issue raised in the District’s response letter.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s authority as set forth in Article 3 of the New York State General Municipal Law. Our methodology and standards are included in Appendix D.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report must be prepared and provided to our office within 90 days, pursuant to Section 35 of the New York State General Municipal Law, Section 2116-a (3)(c) of the New York State Education Law and Section 170.12 of the Regulations of the Commissioner of Education. To the extent practicable, implementation of the CAP must begin by the end of the next fiscal year. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. The CAP should be posted on the District’s website for public review.
1 For guidance on fund balance classification and reporting, see https://www.osc.ny.gov/files/local-government/publications/pdf/gasb54.pdf
2 School districts must file the New York State Annual Financial Report with the New York State Education Department to report their revenues and expenditures. It is based on the State Comptroller's uniform system of accounts and details all financial activities for the fiscal year.