Special Inquiry – August 2025

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Report Summary

Background

On July 8, 2025, officials from the Appoquinimink School District (the District) announced during a meeting of the District’s Board of Education (ABOE) that the District faced a $4.9 million budget shortfall. This shortfall, which was explained as the result of an error of accounting, was unforeseen by previous District financial reporting. ABOE subsequently voted to take advantage of a post-reassessment opportunity afforded to them by Delaware code to raise school taxes and increase Current Expense revenues by 10%.

In response to the District’s announcement and related public outreach, the Delaware Office of Auditor of Accounts (AOA) began a Special Inquiry. This Inquiry examined the District’s financial reporting and accounting practices to determine the conditions that led to the accounting error and makes recommendations for the District and Delaware Department of Education (DOE) to move forward.

The State Auditor is authorized to file special reports under 29 Del. C. § 2909.

Cover Letter from State Auditor Lydia E. York

Dear Fellow Delawareans,

Over the past two years, Delaware’s three counties undergoing the property re-assessment process for the first time in decades has created an air of uncertainty surrounding our systems of taxation and school funding. School boards, county councils, and the General Assembly have taken action to reassure Delaware residents. Still, large and sudden changes to fiscal systems can often expose critical flaws that may not have been evident otherwise.

This July, an especially urgent issue was brought to my office’s attention when Appoquinimink School District announced a critical funding shortfall in the wake of reassessment. My dedicated staff at the Office of Auditor of Accounts worked quickly and diligently to perform a Special Inquiry into this funding deficit. We have examined the results of past audits, systems of public school financial reporting, and the governance policies specific to Appoquinimink. Our findings reveal failures in budgeting, reporting, and review that have resulted in Appoquinimink running large deficits for several years running.

The issues revealed by this Inquiry can be rectified, and our recommendations in the enclosed report illustrate a path towards doing so. They also point towards an opportunity for further examination of the budgeting and financial reporting processes across all 19 Delaware school districts. There is a strong tradition of and need for local control in public education. However, the lack of standardization across school district fiscal departments may contribute to situations like the one at Appoquinimink evading the view of regulators and auditors until they become crises.

The enclosed report represents the best efforts of my office to find answers for the public in a short time, and the first steps Appoquinimink and the Delaware Department of Education (DOE) can take to move forward. I want to thank Appoquinimink for their assistance and cooperation in the creation of this report. In the coming months, my office will continue to work with DOE and stakeholders across Delaware’s public education landscape to find ways we can help answer questions about classrooms, schools, and districts in our State.

Sincerely,

Lydia E. York
State Auditor