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| CONTACT: | Press
Office (518) 474-4015 |
FOR RELEASE: |
Immediately February 15, 2005 |
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Fund
to Support Horse Breeding and Harness Racing A small State Authority connected to horse breeding and harness racing in New York State has serious weaknesses in internal financial controls, as well as a part-time employee who receives full-time benefits, according to an audit released today by State Comptroller Alan G. Hevesi. Auditors identified shortcomings including a lack of written procedures for important financial matters and failure to validate the monetary receipts from horse racing venues that support the Agriculture and New York State Horse Breeding Development Fund (AHBDF). “The Trustees of the Agriculture and Horse Breeding Development Fund have failed to ensure that the organization is handling its financial matters appropriately and effectively,” Hevesi said. “The lack of internal controls opens the door to potential fraud and corruption and diminishes the organization’s ability to fulfill its mission to support horse breeding, harness racing and related activities, all of which are important to New York State’s economy.” Auditors found that an attorney on the AHBDF payroll receives health and dental coverage and is reported as a full-time employee to the State Retirement System. The individual does not work at the AHBDF offices and does not submit time sheets. AHBDF officials said that he provides legal advice or services for the organization as needed. In its response to the audit, the AHBDF said this matter would be reviewed by its Board of Trustees. “It is a slap in the face to New York’s working women and men for a State Authority to provide full-time benefits to an individual who does not work full-time,” Hevesi said. “This is unacceptable and highly inappropriate, and I have referred the matter to Retirement System officials for review.” To support its operations, the AHBDF receives a percentage of the amount wagered at thoroughbred and harness racing tracks and at Off-Track Betting (OTB) locations. Auditors found that the AHBDF did not independently verify the amount it receives from the tracks and OTBs, instead relying solely on the information provided by the tracks and OTB. Auditors noted that the AHBDF did not have a formal contract with
a former executive director who retired but continued to work as a
consultant, or with a veterinarian who was paid $33,320
to draw and test blood samples from horses participating in certain
stakes races. In both of these instances, the AHBDF did not adhere
to its own procurement policies and procedures.
State law limits the percentage of revenues that AHBDF can use for administrative costs, but auditors determined that the Authority spent more for administration than allowed under the law. In 2003, AHBDF overspent its administrative budget by about $191,000, or 49 percent. Hevesi noted that the Gaming Reform Act included in the proposed Executive Budget for 2005-2006 would eliminate the AHBDF and transfer its responsibilities to the State Department of Agriculture and Markets. The AHBDF was created in 1965 to promote the State’s agriculture, horse breeding and equine research. Administered by a staff of two and a Board of Trustees including the Chair of the State Racing and Wagering Board, the Commissioner of Agriculture and Markets and members of the Harness Racing Commission, the AHBDF finances purses for selected races at harness tracks around New York, the State Fair and county and town fairs. The Authority also contributes to equine research, and makes grants to county and town fairs for racetrack repair and construction and to local 4-H clubs for educational programs related to horse breeding. The AHBDF receives one percent of all pari-mutuel bets on live racing at State harness tracks and one percent of all bets on harness racing made through the State’s regional OTB corporations. The Authority also earns one-half of one percent of the bets on simulcast harness races and out-of-state thoroughbred races that are simulcast at New York State harness tracks. In addition, the AHBDF collects revenues resulting from the downward rounding of winning payouts, known as “breakage,” from the regional OTBs, and from fees paid by horse owners to register state-bred horses for races at harness tracks and local fairs. Under State law, the AHDBF must distribute 75 percent of its handle and breakage revenue - $4.95 million in 2003 - to enrich racetrack purses. In its general response to the audit, the AHBDF response noted that most of the auditors’ recommendations have already been or would soon be implemented. A copy of the response is included in the audit. Click here for a copy of the audit. ###
Albany Phone: (518) 474-4015 Fax:(518)
473-8940 |
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