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NYS Comptroller

THOMAS P. DiNAPOLI

News

From the Office of the New York State Comptroller

Thomas P. DiNapoli

July 14, 2016, Contact: Press Office (518) 474-4015

State Comptroller DiNapoli Releases School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the  Attica Central School District, Clarence Central School District, Franklin Square Union Free School District, Greater Amsterdam School District, Greenburgh-Graham Union Free School District, Locust Valley Central School District, Malverne Union Free School District, Putnam Valley Union Free School District, Rockville Centre Union Free School District, Schuylerville Central School District, Shenendehowa Central School District, South Kortright Central School District, Ulster Board of Cooperative Educational Services, West Canada Valley Central School District and the West Hempstead Union Free School District.

State Comptroller DiNapoli has made it a priority to audit school district, BOCES and charter school finances and operations to ensure money is being spent appropriately and effectively. The Comptroller’s audits are designed to help schools improve their financial management practices and ensure proper policies and procedures are in place to protect taxpayer dollars from waste, fraud and abuse. New York’s school districts annually spend approximately $60 billion in federal, state and local funds.

For additional background or a comment on a specific audit, please contact Brian Butry at 518-474-4015 or email: bbutry@osc.state.ny.us.

Attica Central School District – Financial Management (Wyoming County)
Board and district officials have not effectively managed fund balance and have allowed reserve balances to accumulate to excessive levels. Although the board adopted reasonable budgets, district officials have not used the more than $5.2 million residing in the debt service fund for debt service expenditures and inappropriately transferred $1.7 million from the general fund to the debt service fund. This practice allowed the district to appear that it was maintaining unrestricted fund balance within the 4 percent statutory limit. Had district officials not transferred these surplus funds, unrestricted fund balance would have exceeded the statutory limit by between $900,000 and $1.7 million. Furthermore, the district overfunded three general fund reserves, which had balances totaling approximately $2.5 million as of June 30, 2015. Despite the significant amount of accumulated fund balance, district officials have increased the tax levy by approximately 5 percent from fiscal years 2012-13 through 2015-16.

Clarence Central School District – Financial Condition (Erie County)
District officials have not effectively managed fund balance and have allowed unrestricted fund balance to exceed the statutory limit for the past three fiscal years by amounts ranging from 1 to 4 percentage points per year. Although district officials appropriated fund balance each year, none of it was needed because district officials also overestimated appropriations each year by an average of $3.2 million. In addition, the projected fund balance will continue to increase because the district will incur a $2 million operating surplus in 2015-16. Despite the significant amount of accumulated fund balance, district officials have increased the tax levy over the last three years by approximately $3.6 million or 8 percent.

Franklin Square Union Free School District – Fund Balance (Nassau County)
The board and district officials did not maintain a reasonable amount of unrestricted fund balance. While the district has four reserves totaling approximately $4.2 million that auditors determined were reasonably funded based on their supporting documentation and future plans, unrestricted fund balance has exceeded the 4 percent statutory limit for the last three completed fiscal years by an average of 12 percentage points. District officials budgeted to use $3.8 million of unrestricted fund balance for the fiscal years 2012-13 through 2014-15. Instead, the district experienced cumulative surpluses totaling $1.1 million and used only $16,300 in 2014-15. The generated surpluses were a result of overestimating various expenditures which were specifically in personnel service, contractual and debt interest costs. The result of these budgeting practices made it appear that the district needed to both raise the tax levy and use fund balance to close projected budget gaps.

Greater Amsterdam School District – Financial Condition (Montgomery County)
The board consistently developed and adopted realistic budget estimates, but did not properly manage the district’s fund balance and reserves. The district realized operating surpluses in the fiscal years 2012-13 through 2014-15 totaling $7.7 million, which led to an increase in the district’s level of unassigned fund balance that exceeded the levels permitted by law at the end of the 2013-14 and 2014-15 fiscal years. District officials did not establish an adequate plan to use the fund balance to reduce taxes, fund one-time expenditures, pay down existing debt or fund reserves. Furthermore, the district did not develop a multiyear financial plan or any other long-term plan to manage its fund balance and reserves.

Greenburgh-Graham Union Free School District – Financial Condition (Westchester County)
Auditors analyzed the district’s financial condition for the years 2011-12 through 2014-15 and found, in general, that district officials adequately monitor its financial condition. However, district officials have issued Revenue Anticipation Notes (RAN) each year despite the district’s stable cash position. District officials have issued a $1.7 million RAN each fiscal year since 2011-12. Auditors found that the district had sufficient cash flow and did not use RAN proceeds to finance operations. Even though district officials did not use these proceeds, the district incurred annual interest expenditures and other administrative fees on the borrowed funds. The district could have saved a total of $156,963 in RAN related expenditures.

Locust Valley Central School District – Competitive Quotes (Nassau County)
District officials did not consistently enforce the purchasing policy’s requirements for obtaining and documenting verbal and written quotes prior to purchasing goods whose costs exceeded policy thresholds. Auditors reviewed 25 payments totaling $103,468 made during the audit period and found that the district paid $20,262 to six vendors without obtaining the required number of verbal or written quotes.

Malverne Union Free School District – Fund Balance (Nassau County)
In general, district officials effectively managed the district’s fund balance, including reserves. District officials monitored the unrestricted fund balance and reserve balances on a regular basis to provide assurance they were staying within the statutory limit and maintaining reasonable reserve balances. The board also adopted a formal reserve plan, including optimal funding levels, which district officials regularly updated.

Putnam Valley Union Free School District – Financial Condition (Putnam County)
The board and district officials need to improve the budget process to ensure reserves and fund balance are maintained at reasonable levels in accordance with statutory requirements. Over the five-year period (2010-11 through 2014-15), the board adopted budgets that included almost $1 million of appropriated fund balance, which was not used to fund operations because the district incurred operating surpluses during four of the five years. District officials used surplus funds to increase reserves and the debt service fund each year. However, district officials did not use these restricted funds to pay for reserve and debt service related obligations because the board budgeted appropriations each year to pay these expenditures. When the unused appropriated fund balance and excess debt service and reserve funds were added back, the district’s recalculated unrestricted fund balance exceeded the statutory limit, ranging from 8.5 to 12.7 percent. As a result, district officials have missed the opportunity to accumulate less fund balance, reduce the tax levy and increase transparency in the district’s budget process.

Rockville Centre Union Free School District – School Lunch Fund Financial Condition (Nassau County)
The board and district officials could improve their management of the school lunch fund’s financial condition. Although the school lunch fund had surpluses in 2012-13 and 2013-14 totaling almost $25,000, the fund realized a deficit of more than $26,000 in 2014-15, resulting in a 75 percent decrease in fund balance. Furthermore, the district paid health insurance and retirement system costs for cafeteria employees, averaging $41,500 annually, out of the general fund. Had the district paid these costs from the school lunch fund, this fund would have had deficits in each of the last three fiscal years totaling more than $126,000. Additionally, the school lunch fund owes the general fund more than $212,000, which is unlikely to be paid back because it would cause the fund’s cash balance to decline significantly.

Schuylerville Central School District – Fund Balance (Saratoga County)
District officials have not effectively managed the fund balance of the general fund. As a result, the fund balance exceeded the statutory limit for the fiscal years ending June 30, 2014 and 2015. During the 2013-14 fiscal year, the district transferred more than $1.4 million in excess funds from the employee benefit accrued liability reserve to the general fund causing the fund balance to exceed the statutory limit at year-end. District officials have not developed a plan to document their intentions for the amount necessary for any of the district’s reserves or the future use of the reserve funds. In addition, although the district has funded reserves, the board has not established a plan that states the necessary funding levels and provides guidelines for use and replenishment of the reserve funds. 

Shenendehowa Central School District – Claims Processing (Saratoga County)
District officials have established appropriate procedures over the claims processing function to ensure that claims were properly itemized and supported; the goods or services had been received and were for proper purposes; and the claims were audited and approved prior to payment.

South Kortright Central School District – Retiree Health Insurance Contributions (Delaware County)
District officials have established some adequate procedures to ensure retiree health insurance contributions are accurately billed, collected and deposited into district bank accounts. The district also has controls in place to ensure that it is not paying insurance costs for deceased retirees. However, weaknesses exist in the district’s processes for billing and collecting contributions. No one compares the collections with what was actually deposited and no one compares the billing letters to the amounts calculated by the business manager.

Ulster Board of Cooperative Educational Services – Internal Controls Over Purchasing (2016M-158)
BOCES officials adopted policies and procedures requiring that goods of the same kind that exceed $20,000 for purchase contracts and $35,000 for public work contracts within 12 months be subject to competitive bidding in accordance with state law.

West Canada Valley Central School District – Access to the Student Information System (Herkimer County)
Auditors found unnecessary permissions granted for changing student grades, assuming accounts and identities, and viewing personal, private and sensitive information. For example, 29 users were able to change grades without having the responsibility and 11 users could assume other student information system users’ identities without any job-related need to do so. Although these users did not actually change grades or assume other users’ identities, the unnecessary ability to do so weakens controls over system integrity. Auditors also found unnecessary user accounts, including those for three former district employees.

West Hempstead Union Free School District – Financial Condition (Nassau County)
District officials have effectively managed the district’s financial condition. The district’s unrestricted fund balance and reserve balances totaled almost $2 million and $2.5 million, respectively, as of June 30, 2015. However, the decline in those balances by $667,600 and $2.1 million over the past three years suggests the district may be heading toward fiscal challenges.

For access to state and local government spending and nearly 50,000 state contracts, visit OpenBookNY. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.

Albany Phone: (518) 474-4015 Fax: (518) 473-8940
NYC Phone: (212) 383-1388 Fax: (212) 681-7677
Internet: www.osc.state.ny.us
E-Mail: press@osc.state.ny.us