FOR RELEASE:

A State Comptroller’s review of two years of administrative expenses of the Baldwin Union Free School District found no significant expenses that raised concerns of wrongdoing, according to an audit released today by New York State Comptroller Alan G. Hevesi. However, the School District lacked written policies for District officials’ spending on travel, meals, cell phones and gasoline.

Auditors also found that the District at times lacked documentation to indicate whether spending was done for legitimate school purposes. They noted in recent months that the District has taken action to strengthen its policies and oversight of District spending, including requiring itemized justification for expenses and developing policies for cellular phone use and gasoline credit card purchases.

“The findings in this audit show the need for the Baldwin School District to improve controls over spending on travel, meals, cell phones and gasoline. We did not find serious mismanagement or something worse,” Hevesi said. “I’m glad that the Baldwin School District has already taken important steps in recent months to ensure that school funds are being spent appropriately. I also urge the Board of Education to act on the remaining recommendations from the audit.”

The audit examined administrative audits of expenses, such as credit card usage, meals and travel, from July 1, 2002 through August 31, 2004. Auditors found:

• The District spent more than $43,000 on travel and conference expenses. About 23 percent of meal expenses lacked itemized receipts, and 25 of 30 conference-related hotel expenses exceeded the federal per diem reimbursement rates by $4 to $175 per night. While the District requires the superintendent to pre-approve conference attendance, auditors found that the Board of Education did not detail what expenses it would reimburse or for how much.
• $48,800 was expended for meals and refreshments at 455 meetings, including $47,100 for food provided by the school lunch program and $1,700 for District managers for non travel-related meal reimbursements. The documentation supporting these expenses generally did not show who attended the meetings or why attendees required food and refreshments to conduct school business. Auditors also examined receipts submitted by District managers for attending employee retirements dinners and other meetings. While the claims indicated that officials attended these meetings, they did not explain why the District should reimburse the expense. The District has no written policy outlining when it is appropriate to provide meals to employees.
• The District spent about $13,000 on 20 cell phones and had no written policy on who needs cell phones to conduct business or how cell phones should be used. Auditors did find that the District actively managed cell phones, including reducing several cell phones to walkie-talkies.
• The District also charged about $2,100 of gasoline on credit cards, but had no written policy on how to use gasoline credit cards. Auditors found that the former deputy superintendent of administration charged about $1,800 of this amount. Because this individual did not provide itemized receipts for 18 of the 22 claims for reimbursement that were examined, there was no way for auditors to verify if these charges were proper.

Auditors found that District officials had taken action in recent months to strengthen policies and oversight of District spending. For example, the Board of Education adopted policies in November 2004 on gasoline credit card purchases and cell phone use. In addition, a policy was adopted in October 2004 that requires all District officials to submit itemized receipts detailing any reimbursement claims.

Auditors also recommended that the District:

• Adopt a written policy that provides direction for travel-related expenses, including the current requirement to submit itemized receipts and establishing a reasonable maximum per diem rate for lodging and meal expenses.
• Develop a policy outlining when the District may provide meals and refreshments to employees at meetings, who can approve the expense, and how to properly document the expense.
• Require that every claim contain enough supporting documentation to determine that the amounts claimed are necessary expenses.
• Monitor compliance with the recently adopted policies regarding cell phone usage and gasoline purchases.
• Reconcile the gasoline credit card invoices with itemized receipts to ensure that there is proper support for all invoices and that the amounts charged are correct.

In a written response to the audit, the District noted that there are a number of internal controls in place to safeguard resources, such as an internal claims auditor who reports directly to the Board, among others. The District indicated that it would carefully consider the auditors’ recommendations and had already adopted policies on cell phones and gasoline purchases. In addition, explanations for travel and meal expenses were provided. The full response from the District is included in the audit.

The audit also details findings in response to taxpayer complaints sent to the Comptroller’s Office that were investigated as part of the audit. In one instance, an individual raised concerns regarding expenses incurred by school officials who attended a conference in New Orleans. Auditors found those expenses to be reasonable and that officials had taken efforts to control costs. Another complaint raised concerns about superintendents having District-owned vehicles as well as a credit card for gas. While the Board of Education may provide vehicles as compensation in its employment contracts with superintendents, auditors found no inappropriate gas claims.

In the wake of the recent Long Island school scandals, Hevesi announced audits of 21 school Districts on Long Island, including five in-depth audits of internal controls over financial operations, and 16 administrative audits of expenses. This is the first of the 21 audits to be completed.

“I commend District staff members for their cooperation during the audit, and the efforts they have made to restore the public’s confidence in their financial management practices. It is critical that all school districts take action to develop strong, effective checks and balances to prevent fraud and improve management,” Hevesi said.

Click here for a copy of the audit report.

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