Audit Objective
Did the Village of Sherburne (Village) Board of Trustees (Board) develop realistic budgets?
Audit Period
February 28, 2022 – August 29, 2025
Understanding the Audit Area
A village board must develop realistic budgets for financial stability, public trust and transparency; service continuity; and to prevent shortfalls from overestimated revenues or underestimated costs that can lead to tax hikes, service cuts or a fiscal crisis. Realistic and structurally balanced budgeting, where recurring expenditures are met by recurring revenues, builds community confidence, avoids reliance on temporary “one-shot” revenues or funding sources (i.e., appropriated fund balance) and allows for long-term planning to protect the village from unexpected emergencies and maintain essential services.
The Village has four operating funds: electric, general, sewer and water. The Village’s 2024-25 budgeted appropriations were as follows:
- Electric fund: $4,012,640
- Sewer fund: $609,550
- General fund: $1,447,492
- Water fund: $449,739
Audit Summary
The Board’s adopted budgets included underestimated revenues in the general fund and overestimated appropriations in the general, water and sewer funds. As a result, the Board levied more taxes than were needed to fund the Village’s operations. When the Board underestimates revenues and overestimates appropriations, unplanned operating surpluses are produced, which can reduce public trust and transparency to Village residents and taxpayers.
During the audit period, the electric fund had reasonable budget estimates, and the water and sewer fund had reasonable revenue estimates. However, during this same period, the Board adopted budgets for the general, water and sewer funds that appropriated a combined total of $907,700 of fund balance and $219,0001 in reserve funds that were not needed and that underestimated revenues by a combined amount of approximately $930,000 and overestimated appropriations by a combined amount of approximately $1.3 million, as follows:
- The Board underestimated revenues totaling $695,000 and overestimated appropriations totaling $521,000 for the general fund and overestimated appropriations totaling $582,000 for the sewer fund and $240,000 for the water fund.
- Unrealistic budget estimates caused unplanned operating surpluses in the general, water and sewer funds totaling $1.1 million, even though the Board planned for operating deficits totaling $1.3 million. As a result, none of the appropriated fund balance was needed or used.
- Unrestricted fund balance increased by a total of approximately $1.1 million in the general, water and sewer funds.
In addition, the Board did not have written multiyear capital and financial plans, or a written fund balance policy in place to guide the Board’s decisions regarding retaining appropriate fund balance amounts and reserve fund levels. Lastly, the budgets for the 2022-23 through 2025-26 fiscal years did not comply with New York State Village Law (Village Law) Section 5-506 or Office of the State Comptroller (OSC) guidance. The budgets did not contain sufficient information to assist Village officials in planning and monitoring the Village’s financial operations or provide the public with enough information about the Village’s annual financial plan to allow for meaningful input at budget hearings.
The report includes six recommendations that, if implemented, will improve the Village’s budgeting process.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and OSC’s authority as set forth in Article 3 of the New York State General Municipal Law (GML). Our methodology and standards are included in Appendix C.
The Board has the responsibility to initiate corrective action. A written corrective action plan (CAP) that addresses the findings and recommendations in this report should be prepared and provided to our office within 90 days, pursuant to Section 35 of GML. 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. We encourage the Board to make the CAP available for public review in the Village Clerk-Treasurer’s office.
1 The Board-adopted budgets included a planned use of reserves totaling $345,000, of which $126,000 was used, resulting in $219,000 not needed.