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NYS Comptroller

THOMAS P. DiNAPOLI

Audits of Local Governments and School Districts

The Aloma D. Johnson Fruit Belt Community Charter School – Building Lease (2012M-54)


Released: June 22, 2012 -- [read complete report - pdf]

Purpose of Audit

The purpose of our audit was to examine the School's process for selecting and negotiating the related financial terms to obtain building space needed for school operations for the period June 1, 2008 to March 5, 2012.

Background

The Aloma D. Johnson Fruit Belt Community Charter School is located in Erie County. The School is governed by a Board of Trustees (Board) which comprises 11 members, including two institutional partner representatives, one parent, and one teacher representative. The School's 2011-12 fiscal year operating expenses totaled approximately $3.4 million.

Key Findings

  • The Board did not fulfill its fiduciary responsibility to the School by ensuring that it fully evaluated the choice of its school building. In fact, the Board selected a building that was owned by an organization that it had extremely close ties to with no evidence that it is paying market value.
  • The terms of the building lease were not complied with as it appears that the School had been occupying and possibly renovating space that was not included in the lease agreement and without prior SED approval.
  • The terms and conditions of the lease, including the cost of leasehold improvements, directly impacted the School's financial condition, initially resulting in cash flow problems to the School, while also providing a significant financial benefit to the landlord.

Key Recommendations

  • Conduct site selection reviews and cost analysis for all real estate transactions.
  • Ensure that all the terms of the lease agreement are complied with and seek SED approval prior to modifying the terms and conditions of lease agreements.
  • Obtain comparative market rates to provide assurance that the terms and conditions of the lease agreement are in the best interests of the School.

Local Government and School Accountability Contact Information:

Phone: (518) 474-4037; Email: localgov@osc.state.ny.us
Address: Office of the State Comptroller, Division of Local Government and School Accountability
110 State Street, 12th Floor; Albany, NY 12236