Audit Objective
Did the Village of South Glens Falls (Village) Board (Board) and officials develop and adopt realistic and structurally balanced budgets and effectively manage fund balance and reserves?
Audit Period
June 1, 2022 – September 30, 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.
In addition, fund balance, which represents the difference between revenues and expenditures over time, should be effectively managed to ensure financial stability, maintain essential services and be transparent with residents and taxpayers. Effective management helps protect a village from unforeseen financial risks, helps maintain favorable credit rating and enables long-term financial planning.
The Village’s fiscal year 2025-26 budgeted appropriations were:
- General fund: $3.6 million
- Water fund: $760,175
- Sewer fund: $723,712
Audit Summary
The Board and Village officials did not adopt realistic and structurally balanced budgets or effectively manage fund balance and reserve funds during the audit period. The Board routinely overestimated appropriations, did not consistently receive or review monthly budget-to-actual reports and did not adopt fund balance or reserve policies. As a result of the Board’s budgeting and financial monitoring practices, the Village's true financial condition was not transparent. These practices contributed to accumulating excessive surplus funds which may indicate that taxes and fees were higher than necessary to fund operations.
In addition, the Clerk-Treasurer maintained $3.5 million in reserves that were not properly established. Because these reserves were not properly established, the funds are not legally restricted. Village officials also did not develop a multiyear financial plan, limiting their ability to prepare for future operating needs, water and sewer user rates, capital improvements and long-term financial sustainability.
Although we previously identified similar concerns and issued recommendations through an audit and an audit follow-up review,1 Village officials did not take sufficient corrective action to address the deficiencies. As a result, significant weaknesses were not corrected and continued to impair the Board’s ability to effectively manage the Village’s financial resources, fund balance and reserves.
The report includes nine recommendations that, if implemented, will help Village officials:
- Develop more realistic and structurally balanced budgets,
- Improve the management and transparency of fund balance and reserve funds,
- Strengthen long-term financial planning, and
- Enhance the Village’s overall financial condition.
Village officials generally agreed with our recommendations and indicated they planned to initiate corrective action.
This audit was conducted pursuant to Article V, Section 1 of the State Constitution and the Office of the New York State Comptroller’s (OSC’s) authority as set forth in Article 3 of the New York State General Municipal Law (GML). The audit’s 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 OSC within 90 days, pursuant to Section 35 of GML. For more information on preparing and filing the CAP, please refer to the OSC brochure, Responding to an OSC Audit Report, which was provided with the draft audit report. The Board is encouraged to make the CAP available for public review in the Clerk-Treasurer's office.
1 See Village of South Glens Falls – Financial Condition and Budgeting Practices (2014M-102) https://www.osc.ny.gov/files/local-government/audits/2017-11/lgsa-audit-village-2014-south-glens-falls.pdf and Village of South Glens Falls – Audit Follow-Up (2014M-102-F) https://www.osc.ny.gov/files/local-government/audits/2017-11/lgsa-audit-village-2016-south-glens-falls-follow-up.pdf.