FOR RELEASE:

Sachem School District Improves Oversight Following Findings of State Comptroller Audit

Comptroller Commends Actions of Board to Address Problems

The Sachem Central school district has improved oversight of contracts and developed policies for meals, cell phones and other expenses following a State Comptroller’s audit of administrative expenses from July 1, 2002 through August 31, 2004.

Auditors found that the district was generally managing administrative expenses well, but board members did not disclose their interests in contracts and the district had overpaid at least three administrators for unused vacation time, incurred unnecessary expenses for a security contractor and overpaid another contractor.

“Auditors found that Sachem district officials did not properly enforce contract provisions, and board members did not fully disclose their interest in contracts, which is critical in fostering public openness and avoiding the appearance of favoritism,” Hevesi said. “But overall, the district did a good job of keeping administrative expenses in check, and the board responded quickly to implement the auditors’ recommendations.”

Auditors found:

• Errors in Oversight of Employment Contracts. The assistant superintendent for business was overpaid about $3,000 for unused vacation time, which is not permitted under his employment contract. When auditors raised the matter with the district, the assistant superintendent immediately offered to make restitution and has since repaid the district. The district also overpaid some retiring administrators for their unused vacation time because its calculation was based on final salary of the individual rather than a five year average. In sample testing, auditors found that this calculation error resulted in two officials getting overpayments totaling $2,148. Additionally, the board president did not approve 76 of the 155 vacation days that the superintendent carried over from previous years, as required.
• Unnecessary Payments to Director of Security. The district contracted with BOCES and Suffolk County Organization for the Promotion of Education (SCOPE) for a director of security. The district paid this individual $6,493 for unused sick leave he earned as a BOCES employee. In addition, even though the agreement did not require it, the district provided this individual a district vehicle for his personal and school use, paid $3,825 for cell phone and gas charges, and incurred $1,335 in travel costs. Auditors also found that the director approved the timesheets and performed evaluations for his two sons who worked for the security department. The district has since hired an in-house security employee and is discussing necessary step with legal counsel to recover funds.
• Failure to Disclose Interest in Contracts. The district purchased athletic uniforms for $643,000 from a company that employed a member of the board. Auditors found no indication that this board member disclosed his interest in these contracts, as required by law. In addition, the president of the board did not disclose that his son is a partner in a company that was seeking a contract to provide Internet services. The president also voted in favor of the contract and the contract was approved. Even though the law does not require a board member to disclose this information, auditors believe the president should have disclosed this matter and recused himself from voting to avoid the appearance of impropriety. Additionally, auditors found that the Internet contract was not competitively bid, as board policy required. The district overpaid the company $3,325 but recovered the money after auditors brought this to its attention. The district agreed with the auditors’ recommendation and now requires board members to submit a related-party disclosure statement.
• Policies Needed for Meal, Cell Phone and Credit Cards Expenses. The district spent about $18,000 for meals at 143 meetings and events, but had no policy outlining when it was appropriate to provide refreshments or meals. Another $36,780 was spent on about 60 cell phones. While no policy existed for cell phone use, the district monitored cell phone usage and sought reimbursement for personal calls. About $1,750 was charged on district credit cards, and, while the district had no policy for credit card use, auditors found no concerns with the use of these cards. The district has since canceled all but one of its credit cards and adopted policies for meals and cell phone expenses.
• Good Management of Travel Expenses. About $7,500 was spent on travel-related expenses for managers and board members. The district had a policy regarding travel and auditors found no expenses of concern.
• Internal Claims Auditor Not Reporting to Board. The internal claims auditor reported directly to the assistant superintendent for business rather than the board. Since she reported to someone who supervised other employees responsible for authorizing, recording and paying claims, she did not provide an independent review of claims. An outside firm has since been hired to serve as the internal auditor.

Auditors made 10 recommendations to improve district operations, which the district indicated have or will be implemented. The district’s detailed response to each of the auditors’ recommendations is included in the final audit, as well as state auditors responses to taxpayer complaints.

The Sachem Central school district operates 18 schools with approximately 15,500 students and has a workforce of about 3,100 employees. Its 2004-05 budget was $243 million.

Click here for a copy of the audit.

###