DiNapoli's Office Completes School Audits
New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the Bridgehampton Union Free School District, the Elmont Union Free School District, the Franklinville Central School District, the Lakeland Central School District, the Union Free School District of the Tarrytowns, the Waterford-Halfmoon Union Free School District, the Windham-Ashland-Jewett Central School District and a multi-district audit comparing Liquid Propane-Powered and Diesel-Powered School Buses.
“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.”
Bridgehampton Union Free School District – Non-Resident Tuition (Suffolk County)
Twenty-one non-resident students attended the district in 2009-10, and 19 non-resident students attended the district in 2010-11, representing approximately 13 percent of the district's 150 students. According to the board's adopted policies and related resolutions, the tuition for these non-resident students could have totaled $256,225 for the fiscal years 2009-10 and 2010-11. However, auditors found the district only charged $144,575 for these students. The district has collected $100,525 of the tuition charged, with $42,800 still expected to be collected for 2010-11. The remaining $1,250 is lost revenue for one student as the district failed to collect an outstanding balance for the 2009-10 school year.
Elmont Union Free School District – Internal Controls over Selected Financial Operations (Nassau County)
Auditors found that the board inappropriately delegated the discretionary functions of approving purchase orders, journal entries and wire transfers to its business consultant. Consequently, the business consultant was responsible for approving all district purchases, including the purchase of his own services. In addition, he approved journal entries and wire transfers for the two months reviewed totaling $25.4 million, representing a combined 93 percent of all such activity for those two months. The district also paid four former employees $9,820 for unused vacation leave that was not authorized by their employment agreements or board resolutions. District officials generally did not solicit competition when obtaining professional services and continued to use the same professionals year after year. Auditors reviewed payments made to 10 professionals, totaling $1.23 million, and found that six of the professionals, who were paid $1 million, were hired without the benefit of competition. Finally, internal controls over the district's IT system need to be improved.
Franklinville Central School District – Financial Management (Cattaraugus County)
Auditors found district officials did not provide for effective financial planning and management of budget estimates. While district officials did a good job of controlling expenditures, district budgets routinely overestimated appropriations. As a result, the district generated more than $2.3 million in operating surpluses over a three-year period. Four district reserves funded by budget surpluses had unsupported balances totaling $2.3 million at June 30, 2010. Combining the district's unreserved fund balance over the legal limit and the unsupported balances in the four reserves, the district has accumulated $4.1 million in excess funds that should be used to benefit taxpayers.
Lakeland Central School District – Administrative Costs Relating to Instructional Technology Operations and Claims Processing (Westchester County)
At an average salary of $89,719 for technology administrators, the district could save approximately $209,942 if it chose to operate its instructional technology program with technology administrators equal to twice the average of other similar districts. In addition, by revaluating the amount of resources utilized for videographer and website services, the district could potentially save an additional $68,000. Finally, the board has not adopted a written job description, policies and procedures to provide specific instructions and communicate its expectations to the claims auditor. As a result, the claims auditor, who has served in that position for the past 10 years, was not aware of the requirement to report directly to the board.
Union Free School District of the Tarrytowns – Debt Refinancing (Westchester County)
District officials did not provide any documentation to show that they performed the necessary analysis of potential debt refinancing measures that may have identified ways to reduce interest costs over the life of the district's debt.
Waterford-Halfmoon Union Free School District – Internal Controls over Financial Operations (Saratoga County)
The board did not fully comply with the requirements of 2005 school district accountability legislation. Specifically, one board member did not obtain the required training as to his financial oversight responsibilities. Although the board did appoint a claims auditor, she did not report directly to the board or perform a satisfactory audit of claims. Auditors also found that the business manager circumvented the board's policy by making budget transfers totaling approximately $1.1 million, without obtaining the required board approval. In addition, internal controls over financial operations are inadequate, and employees received buy-out and longevity payments totaling $59,670 to which they may not have been entitled
Windham-Ashland-Jewett Central School District – Internal Controls over Information Technology and Online Banking (Greene County)
Auditors found the district has not established sufficient controls over its IT system. District officials have not established a formal security plan, do not adequately monitor system activity, and have not established appropriate controls over remote access and backing up system data. In addition, the board has not established a formal online banking policy and procedures governing electronic and wire transfers. The business manager serves as the online banking contact/administrator for all of the district's online banking activity and has online access to the bank accounts for transactional purposes. However, she also records transactions and has the responsibility for monitoring all electronic banking activity with limited oversight by other district officials. With these incompatible duties, the business manager could initiate an online wire transfer to an unauthorized bank account without immediate detection.
A Comparison of Liquid Propane-Powered and Diesel-Powered School Buses
Auditors found that LP-powered buses cost more than the diesel alternative. However, New York State currently provides NYSERDA grant funds to bridge the difference in cost. Auditors also found that LP fuel costs - with help from a federal tax credit - are lower, and that maintenance of LP buses is less expensive. However, paying for LP fueling stations could add to a district's start-up costs for using LP buses. If government tax credits for LP-powered buses continue to be available, and if surcharges on diesel-powered buses continue to increase, LP-powered buses can be a lower-cost alternative to diesel-powered buses. LP fuel is also safer to use and store than diesel fuel. Districts included in the audit were: Bainbridge-Guilford Central School District, the Ithaca City School District, the Owego-Apalachin Central School District, the Trumansburg Central School District, the Union-Endicott Central School District and the Vestal Central School District.
To view the audits above, visit: www.osc.state.ny.us/localgov/audits/index.htm.