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August 11, 2011


DiNapoli's Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed the audits of the Saugerties Central School District, the Stillwater Central School District and BOCES.

“My office’s audits of school districts and BOCES help schools improve their financial management practices,” DiNapoli said. “These audits are tools for schools to make sure proper policies and procedures are in place to protect taxpayer dollars and provide students with the best possible education.”

Saugerties Central School District - Financial Condition and Internal Controls Over Information Technology (Ulster County)
The district's adopted budget for the 2007-08 fiscal year contained an inaccurate estimate of state aid revenues, in excess of the State Education Department's published estimates. This resulted in an operating deficit of $1.9 million. Although the district had revenue shortfalls in the 2008-09 year, it did not have an operating deficit. However, the district again overestimated state aid in the 2009-10 fiscal year, which brought the total operating deficit to $1.5 million. These combined operating deficits reduced the unreserved fund balance in the district's general fund to a deficit of over $1.1 million at June 30, 2010. As a result of revenue shortfalls, district officials issued a $3 million revenue anticipation note (RAN) in July 2009 and a $4.9 million RAN in June 2010 to meet cash flow needs. District management also needs to improve controls over IT.

Stillwater Central School District - Budgeting Practices (Saratoga–Rensselaer–Washington Counties)
The board routinely adopted budgets that were conservative, particularly for expenditures. For the last five fiscal years, the district overestimated expenditures by a total of approximately $4.8 million. The conservative budget estimates resulted in revenues exceeding expenditures by approximately $2.8 million over the last five years. Furthermore, the district's spending plans made it appear that they would appropriate a portion of its accumulated fund balance each year to close projected budget gaps. In reality, the district's budget resulted in an operating surplus and no fund balance was ever used as a source of financing in those years.

BOCES Treatment of the Annual Surplus From Cooperative Service Agreement (CoSer) Operations (Broome-Delaware-Tioga and Orange-Ulster BOCES)
Both Broome-Delaware-Tioga (BT) and Orange-Ulster (OU) BOCES have been generating significant and growing surpluses because they routinely overbill for CoSer services, and regularly have priced CoSer services higher than necessary to cover costs. BOCES set tuition rates using historical enrollment rates rather than current year enrollment projections from districts. Additionally, BOCES do not make mid-year pricing adjustments based on actual program participation that would reduce overbilling. As a result, BT BOCES' surplus grew 45 percent and OU BOCES' surplus rose 141 percent between 2006-07 and 2008-09. School districts served by BT and OU BOCES do not include significant surpluses, which averaged $500,000 per participating district in 2008-09, on their financial statements because neither BOCES provides individual districts with an estimate of their surplus refunds until mid-way through the next fiscal year. Finally, BT BOCES accumulated its unreserved fund balance from one CoSer in violation of Education Law, and incorrectly reported these monies on its financial statements.

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