FOR RELEASE:

State Audit: Wayne-Finger Lakes BOCES Did Not Notify Schools of $1.7 Million it Allocated to Reserves

Wayne-Finger Lakes Board of Cooperative Educational Services placed $1.7 million of its operating surplus in reserve funds without getting board approval and without notifying its component school districts, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“Taxpayers of component school districts largely fund BOCES operations,” DiNapoli said. “Wayne-Finger Lakes BOCES should have notified the school districts about the $1.7 million operating surplus so they could weigh in on how to best use the money. The school districts that BOCES serves should not be kept in the dark about BOCES’ finances.”

The audit of reserves, which covered July 2005 to November 2007, found that in the 2005-06 and 2006-07 fiscal years, BOCES did not get board approval to allocate $1.7 million in surplus funds to three reserve funds and did not properly report the allocations to its school districts as required. By failing to get the board’s approval, BOCES circumvented the process through which the board determines how to use surplus funds. School districts are ultimately entitled to these funds. The Education Law requires BOCES to credit excess moneys to each of its component and participating school districts each fiscal year. Instead of identifying the end-of-year surpluses that were allocated to reserve funds in its reports to school districts, BOCES factored the surpluses into expenditure amounts.

In addition, auditors determined BOCES did not have the legal authority to establish the Retiree Health Insurance Reserve fund, which contained $294,450, because there is no law that allows BOCES or other municipalities to create a reserve fund for retiree health care costs.

Auditors also found in 2006-07 BOCES allocated $1.2 million, or 44 percent, of its operating surplus to the Employee Benefit Accrued Liability Reserve Fund. When determining its EBALR liabilities, BOCES included $277,204 of expenses that are not allowed to be paid for with EBALR funds such as payroll-related expenses, retirement incentives and longevity payments. In addition, BOCES did not get board approval to create the EBALR fund.

DiNapoli’s audit also found BOCES’ controls over its computerized financial system needed to be improved.

DiNapoli’s office recommends that BOCES’ officials:

• properly notify component and participating school districts of all surplus funds;
• ensure that reserve funds are properly established;
• obtain prior approval from the board to allocate surplus funds to reserves; and
• return the money inappropriately transferred to the Retiree Health Insurance Fund to operating funds.

The district’s response is included in the audit. Click here to view 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 school districts and Board of Cooperative Educational Services by 2010. The State Comptroller’s office has completed 630 school audits and approximately 140 school audits are currently underway.

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