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February 6, 2009

DiNapoli: $4 Million More Than Necessary in
Copiague UFSD Benefit Fund

District Spent $1 Million on Professional Services
Without Seeking Best Price

Inadequate accounting caused the Copiague Union Free School District to keep nearly $4 million more than it needed for employee benefit accrued liability reserve funds (EBALR), according to an audit released by State Comptroller Thomas P. DiNapoli. The audit also found that, contrary to district policy, the district spent more than a million dollars on professional services without soliciting a request for proposals. Moreover, weak financial controls created an atmosphere that could have caused the district to make inappropriate and unnecessary purchases. The audit covered the period July 2006 to February 2008.

“Districts need to be very careful with taxpayer dollars,” said DiNapoli. “There must be a clear understanding of the rules, proper accounting, and strict adherence to those rules. And reserve funds should have balances that reflect needs; there should be no excess. Now more than ever, every dime counts, especially when they’re taxpayer dimes.”

General Municipal Law authorizes school districts to create an EBALR to pay departing employees for unused sick leave, holiday leave, vacation time, as well as any other forms of payment for accrued leave time. The district established an EBALR in 2002-03, funding it with $3,835,217. The district transferred another $5,830,802 into the EBALR, increasing it to $9,666,019 in 2005. The fund had a total of $9,282,942 as of June 2007 but liabilities were $5,425,351, resulting in $3,857,591 more than necessary in the EBALR. This money could have been redirected to other reserves or used to reduce property taxes.

Additionally, auditors found:

  • the board temporarily appointed the treasurer to act as claims auditor for a three month period, even though the treasurer was not eligible for the position. As a result, payments could have been made for goods and services that were unnecessary, unauthorized or inappropriate, or not received by the district; and
  • although the board established a policy for the procurement of goods and services not subject to competitive bidding, officials did not always comply with it. Among 10 professional service providers, six professionals were hired without the solicitation of requests for proposals, at a total of $1,044,706.

DiNapoli recommended that district officials:

  • analyze the balance in the EBALR and transfer funds in excess of the amount necessary to satisfy all liabilities incurred or accrued against the fund to other reserve funds as authorized by law;
  • credit the pro rata share of interest earned to the EBALR;
  • appoint only independent individuals to the position of claims auditor; and
  • comply with the district’s procurement policy and obtain appropriate competition when procuring goods and services.

With a few exceptions, district officials generally agreed with DiNapoli’s recommendations and indicated they planned to take corrective action.

Click here for a copy of the audit.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 834 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed 530 school audits and approximately 200 school audits are currently underway.


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