The Newburgh Enlarged City School District (District) is governed by the Board of Education (Board) which comprises nine elected members. The Board is responsible for the general management and control of the District’s financial and educational affairs. The Superintendent of Schools (Superintendent) is the chief executive officer of the District and is responsible, along with other administrative staff, for the day-to-day management of the District under the direction of the Board.

The District has an appointed tax collector who is responsible for the collection, receipting, recording, and depositing of tax payments. The approved tax warrant for the 2006–07 fiscal year was $89.7 million. The District collected these taxes in three installments with payments due on October 5, 2006, December 5, 2006, and March 5, 2007. In addition to collecting taxes, the tax collector provides title search certifications.

The District employs approximately 2,300 employees, including substitutes, and its annual payroll is approximately $127.9 million. The Human Resource Department is responsible for maintaining the records for employee accruals.

Scope and Objective

The objective of our audit was to determine if District officials were properly safeguarding their financial resources for the period January 1, 2006 through January 24, 2007. Our audit addressed the following related questions:

• Did the tax collector process and deposit all tax receipts in a timely manner?
  
  
• Did the tax collector charge and collect title search fees in accordance with Board resolution?
  
  
• Did District officials adequately monitor employee time and attendance to ensure that all absences are accurately charged to appropriate leave accruals?

Audit Results

Our audit identified instances in which the Board and District officials have not developed and adopted policies that provide for the prompt deposit of tax receipts and monitored compliance with the Board’s resolution to charge and collect title search fees and time and attendance policies.

We examined all tax payments made for the first two installment collection periods, October and December 2006, and found that the tax collector did not timely deposit $29.6 million of the $50.5 million collected. As a result, the District potentially lost $42,900 in interest revenue. Using October 5 and December 5, 2006, as receipt dates, we determined that the tax collector took between 5 and 33 days to make 22 batches of tax receipt deposits for the October installment and between 6 and 29 days to make 19 batches of tax receipt deposits for the December installment. For example, a tax service company’s diskette of 3,565 tax payments for $3.4 million received on or prior to October 5th was not credited to the District’s bank account until October 19, 2006.

On July 1, 1987, the Board adopted a resolution that established a $10 fee for all written certifications of tax searches. We found that the tax collector only charged title search companies for certifications, but did not charge and collect title search fees from homeowners, mortgage companies, lawyers, and banks. Failure to charge and collect a $10 fee for all written certifications of searches resulted in lost revenue to the District. From January 1, 2006 to December 31, 2006 the District received $24,510 for 2,451 title search certifications. According to the tax collector this represented approximately one-half of the searches performed. Therefore, it is likely that the District lost at least $24,000 in revenue from title searches.

We also identified instances where 30 of the approximately 400 employees we tested at one school for the month of December 2006 did not sign the sign-in-sheets or call the sick line, for a combined total of 51 days. No other excused absences were recorded on file either. We determined that the 51 days amounted to about $12,000. There is no evidence that the District took any action that resulted in salary reductions for the 30 employees in accordance with their bargaining agreements.

Comments of District Officials

The results of our audit and recommendations have been discussed with District officials and their comments, which appear in Appendix A, have been considered in preparing this report.