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June 15, 2011

 

DiNapoli's Office Completes School Audits

New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the Bethlehem Central School District, the Carmel Central School District, the Corinth Central School District, the Ilion Central School District, the Kendall Central School District, the Newburgh Enlarged City School District and the Newfane 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.”

Bethlehem Central School District – Internal Controls over Budgeting and Purchasing (Albany County)
The district did not have statutory authority for a reserve fund that had a balance of $1.89 million in the 2010-11 fiscal year. Therefore, the district's general fund unreserved fund balance should have been reported as $5.7 million, which was 6.5 percent of the subsequent year's budget and in excess of the statutory limit. In addition, district staff made purchases from employee-owned businesses totaling $5,838 in violation of board policy. The district also entered into professional service contracts totaling $718,800 and purchased other items not subject to competitive bidding requirements totaling $16,800 - without seeking price competition - in violation of board policy.

Carmel Central School District – Internal Controls Over Information Technology (Putnam and Dutchess counties)
District officials did not establish adequate IT policies and procedures, and district employees did not use district-owned computers in accordance with the board policy. A teacher's district computer was used to access pornographic websites, and district employees spent 314 hours during the audit period accessing five non-job-related sites from district computers, which we estimate cost district taxpayers $9,834 in wasted productivity. Further, district personnel spent 1,691 hours, with an estimated salary value of $52,962, on a social networking site. Finally, district officials did not have a disaster recovery plan or classify the district's data according to its sensitivity and importance in the event of system disruption.

Corinth Central School District – Fund Balance and Reserves (Saratoga and Warren counties)
The board and district officials consistently overestimated expenditures and underestimated revenues, which resulted in annual operating surpluses, and appropriated fund balance they did not need, resulting in increases to fund balance of $2.8 million over the last four fiscal years. Further, the district's unreserved, unappropriated fund balance exceeded the amount allowed by law in each of the last four years. The district has more than $1.89 million in excess fund balance and unnecessary reserves that could be used to benefit taxpayers.

Ilion Central School DistrictFinancial Condition and Internal Controls Over Cafeteria Receipts (Herkimer County)
The board did not adequately monitor its fund balance. Consequently, the district accumulated approximately $1.95 million in excess funds that should be used to benefit taxpayers. The district retained at least twice the amount of fund balance allowed by law in each of the last four fiscal years' budgets. The district's budgets resulted in operating surpluses in three out of the last four fiscal years. Therefore, none of the fund balance that was appropriated in those three years was actually used, and the district's year-end fund balance actually increased rather than decreased. Finally, the district has not established adequate internal controls over cafeteria cash receipts.

Kendall Central School District Financial Condition (Orleans and Monroe counties)
As of June 30, 2010, the District overstated certain liabilities by $6 million and overfunded certain reserves by $1.85 million. Had the liabilities been properly accounted for and the reserves reasonably funded, the combined total of $7.85 million would have increased the district's actual unreserved, unappropriated fund balance to $8.5 million at the end of the 2009-10 fiscal year, representing 52 percent of the ensuing year's appropriations of $16.2 million. In addition, district officials borrowed money the district did not need in amounts ranging from $1.5 million to $2 million, and incurred associated debt issuance and interest costs totaling almost $195,000 during the last three completed fiscal years.

Newburgh Enlarged City School District – Transportation Cost Savings (Orange County)
The district can save money by reducing excess capacity on buses, and sharing transportation for students with disabilities with other districts. By making these changes to improve transportation efficiency, the district could achieve as much as $2.2 million in annual cost savings. In addition, the district did not have a process for tracking approved transportation contracts or timely reconciling transportation expenditures and as a result the district's State Transportation Aid may be reduced by approximately $938,000. The district also had missed the opportunity to claim an additional $30,900 in expenditures which were attributable to approved contracts and would have provided approximately $24,700 in additional aid.

Newfane Central School District – Employee Benefit Accrued Liability Reserve Fund and Student Transportation Operations (Niagara County)
Although the district properly established an EBALR, it did not fund the reserve in an appropriate manner. The EBALR is overfunded by $8.1 million. In addition, by increasing bus occupancy, eliminating bus routes, and sharing common routes with neighboring districts, the district could save more than $418,000 annually in transportation costs. This amount represents approximately 20 percent of the district's student transportation costs in the 2009-10 fiscal year.

To view the audits above, visit: www.osc.state.ny.us/localgov/audits/index.htm.

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