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January 13, 2009

DiNapoli’s Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of Albion Central School District, Bellmore Union Free School District, Hilton Central School District, Sherman Central School District and Wilson Central School District.

“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.”

Albion Central School District – Financial Condition and Internal Controls Over Purchasing (Orleans and Genesee counties)
The audit found the district did not ensure that budget estimates were reasonable and did not establish and maintain reserves in accordance with statutory requirements. Auditors found the district routinely overestimated appropriations and underestimated revenues. Poor budget estimates resulted in revenues exceeding expenditures by more than $5 million over the last five fiscal years. The district’s budgetary practices consistently resulted in operating surpluses that district officials used to increase four general fund reserve funds, including two that either lacked adequate documentation of their need or were established and funded without proper legal authority. District officials also failed to comply with General Municipal Law requirements and the district’s own purchasing policies when procuring goods and services.

Bellmore Union Free School District – Internal Controls Over Selected Financial Activities (Nassau County)
Auditors found that district officials did not adequately address the excessive general fund balance. The board appropriated $2.8 million of fund balance in June 2007 to reduce the 2007-08 tax levy. The remaining unreserved fund balance of $1.77 million in June 2006 represented more than twice the amount allowed by law. The district’s unappropriated fund balance for the three fiscal years ended June 30, 2005, 2006 and 2007 exceeded the statutory limitation in each of those years. In addition, internal controls over cash disbursements were not operating effectively. Although the treasurer and board president are board-designated signatories, they do not directly supervise the check-signing process, as required by Education Law. District officials also failed to solicit request for proposals, for 15 of the 16 professional services providers reviewed.

Hilton Central School District – Internal Controls Over Purchasing and Payroll (Monroe County)
The audit found that although the board adopted a purchasing policy, the policy did not address the procurement of professional services. Auditors found that district officials solicited requests for proposals for only two of 22 vendors. In addition, there were no written agreements in place for six vendors. District officials need to establish policies and procedures for payroll expenditures.

Sherman Central School District – Internal Controls Over Payroll Expenditures and Financial Condition (Chautauqua County)
The audit found district officials did not establish written policies or procedures to guide the payroll process and did not monitor payroll expenditures to ensure that they were made in compliance with authorized contracts and salary agreements. Due in part to this lack of oversight, the district paid almost $31,000 in unauthorized salary and benefits. In addition, the board did not adopt realistic budgets and did not address excessive fund balance in the general fund. As of June 2007, the unreserved, unappropriated general fund balance totaled $795,197. This amount was more than three times the amount allowed by law.

Wilson Central School District – Internal Controls Over Financial Condition (Niagara County)
Auditors found district officials did not prepare reasonable budgets for the 2004-05 through the 2007-08 fiscal years. District officials consistently overestimated expenditures and underestimated revenues – even though data was often available to develop more accurate budget estimates – and made budget transfers far in excess of budgeted amounts disclosed to voters. As a result, the district generated operating surpluses totaling $7.6 million during this period. District officials put the majority of the $1.9 million average annual surplus in reserve funds, appropriating only $250,000 in each of these years to reduce the next year’s tax levy. As of June 2007, balances in the district’s five reserves in the general fund totaled $3.8 million; three of these reserves are overfunded and/or were used to pay for costs that did not meet statutory requirements. The district is also holding $3.2 million in the debt service fund, most of which had no identifiable purpose. With more accurate budgets and better fiscal management practices, real property taxes in the district would likely have been substantially lower. Auditors estimate that about $2 million in taxes were unnecessarily levied in the 2007-08 fiscal year alone.

Click on the link above to view the audits.

If you have any questions or would like a comment from the Comptroller’s office regarding any of the audits above, please call the Press Office at 518-474-4015.


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