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March 10, 2008

DiNapoli: Inadequate Oversight at Eden CSD

Better Monitoring Could Have Saved Tax Dollars

The Eden Central School District did not adequately plan and monitor capital projects, resulting in escalating costs and project scope revisions, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“Capital projects must be run efficiently and effectively to protect taxpayers’ money,” DiNapoli said. “There was a breakdown in internal controls at the Eden Central School District because officials did not adequately plan and monitor capital projects. It is imperative that the district make appropriate fiscal decisions.”

The audit found that the board and district officials did not provide adequate planning, monitoring, oversight and management of capital project activities from July 2005 to May 2007. District officials:

  • delegated significant capital project responsibilities to its architect whose estimates were consistently poor, resulting in project scope adjustments or delays;
  • did not abide by the contract by providing a written plan to the architect;
  • did not obtain written assurances from the architect resulting in additional costs that officials thought were covered;
  • did not monitor the contractor that manages the energy-saving initiatives resulting in costs escalating from $172,000 to $525,000;
  • did not independently monitor and verify the accuracy of energy-cost saving performance data to ensure that the district is receiving its guaranteed savings and, if applicable, receiving contractor subsidies for any shortfall;
  • relied on assurances from its contractor that parts would be covered in the technical support agreement, costing $985,000 (or 60 percent of the cost of the co-generation facility), when in fact a review of the signed agreement states otherwise; and
  • initially neglected to properly apply for almost $573,000 in financial aid available to them.

In addition to poor capital project management, the district also did not reconcile bank accounts in a timely manner. Furthermore, state auditors also found that nearly $2.7 million was paid prior to approval by the claims auditor. In fact, the claims processing controls were so poor that 90 percent of the claims tested contained at least one deficiency.

DiNapoli’s audit makes numerous recommendations, some of which include that district officials:

  • establish internal controls to ensure that capital projects are properly planned;
  • develop a written plan to document the district’s criteria for the projects and monitor the written plan;
  • create a monitoring system to ensure that the district is applying for all financial assistance that is available;
  • establish monitoring procedures for documenting bids and confirming the accuracy of contractor submitted information and performance; and
  • ensure that claims are reviewed and approved before payment is made.

District officials generally agreed with the audit’s recommendations. However, they disagreed with certain audit findings. The district’s full response is included in the audit report.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 834 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed 378 school audits and approximately 200 school audits are currently underway.

Click here for a copy of the audit.



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