Mismanagement by village trustees caused the village of Fredonia’s finances to deteriorate over a six-year period, according to an audit by the state Comptroller’s Office.

The audit, released Friday, covers the six-year period of 2019-25. It demands a corrective action plan from the village within 90 days.

“Although the (trustees) told us that they routinely monitored financial operations – by reviewing monthly reports and conducting budget work sessions each year – the trustees did not fully understand the village’s financial condition and relied heavily on the Village Treasurer for guidance,” according to the audit.

“The Board (of Trustees) did not take appropriate actions to maintain the Village’s fiscal stability, such as adopting structurally balanced budgets and written multiyear capital and financial plans and ensuring that the Treasurer filed annual statements and (reports) when required,” the audit continues. “As a result, the Village’s financial condition deteriorated over a six-year period from the 2019-20 through 2024-25 fiscal years.”

The audit notes the use of fund balance to finance operations or avoid increasing taxes. “From the 2019-20 through 2024-25 fiscal years, the Board adopted budgets for the general, water and sewer funds with planned operating deficits that totaled $3 million over the… six years.”

This caused unrestricted fund balance across the general, water and sewer funds to decline by more than $2.8 million.

“As a result, the village did not have sufficient resources to fund 2024-25 operating expenditures and had to issue an $825,000 revenue anticipation note (RAN),” the audit report goes on to note. “When the RAN matured the following year, officials had to increase the village real property tax levy by $1.7 million (55% tax increase) in the 2025-26 fiscal year to repay the RAN and to balance recurring revenues with recurring expenditures.”

The audit also criticizes trustees for failing to create “written comprehensive multi-year financial and capital plans to address the Village’s long-term operational and capital needs.” In addition, trustees did not ensure that the treasurer filed an annual statement with the village clerk, or properly filed a report with the state Comptroller’s Office, over the past five fiscal years.

The audit makes eight recommendations to the village about improving its financial operations and stability. Among the recommendations:

— “The board should adopt realistic, structurally balanced budgets, based on historical trends and known plans for the fiscal year, with sufficient recurring revenues that finance recurring expenditures, and that include sufficient resources for capital project expenditures.”

— Trustees should also “closely monitor the Village’s finances, including available fund balance and cash balances, and ensure that the Village financial condition does not decline further.”

— The treasurer should “prepare and update financial reports, such as cash flow projections, on a routine basis and present them to the board for consideration and appropriate corrective action.”

— The trustees must develop and update multiyear financial and capital plans and ensure that the treasurer properly submits statements and reports.

“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 state law, the Comptroller’s Office ordered Fredonia.