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May 6, 2009

 

DiNapoli Audit Faults Purchasing Practices of

St. Mary's School for Deaf

Urges SED to Strengthen Regulations for State-Sponsored Schools

St. Mary’s School for the Deaf in Buffalo purchased goods and services without seeking competition and without written specifications, which may have led to higher costs, State Comptroller Thomas P. DiNapoli said today. The school has agreed to change its purchasing practices in response to an audit released today by DiNapoli’s office. DiNapoli also urged the State Education Department (SED) to strengthen the requirements that state-sponsored schools, such as St. Mary’s, follow when making purchases.

“When you don’t get competitive bids, you almost always end up overpaying,” DiNapoli said. “St. Mary’s needs to tighten up its purchasing process. Fortunately, in response to our audit, they’ve agreed to do just that. St. Mary’s and SED are both working to improve their procedures and making sure taxpayer dollars are spent wisely.”

St. Mary’s School is one of 11 private schools in New York State that receives nearly all of its operating aid from the state to educate disabled students. During the 2006-07 school year, St. Mary’s received about $11.3 million in state funds and had an enrollment of approximately 115 children. These 11 state-sponsored schools are not legally required to follow competitive bidding requirements under General Municipal Law but instead follow procedural guidance from SED.

This audit is part of DiNapoli's review of the financial operations of schools across the state. Currently, there are five audits of state-sponsored schools underway, including New York Institute for Special Education, Lavelle School for the Blind, St. Joseph’s School for the Deaf, Lexington School for the Deaf, and St. Frances de Sales School for the Deaf.

Among the problems found:

  • 19 of 20 purchases examined totaling $1.8 million were not publicly advertised for bid, nor were written specifications prepared by the school. Without detailed written specifications, the school did not have a way to judge the price and quality of bidders’ proposals when awarding the contracts, nor does it provide a level playing field for prospective bidders.
  • The school paid $121,669 more than expected for eight projects because of change orders. For instance, the school hired a company to renovate bathrooms, a dormitory lounge, a kitchen and a fire pump system for $309,000, and then paid another $50,838 for modifications in scope of the work. A company working on the sprinkler system received more than double the original bid because of change orders. Auditors questioned why there were no detailed written specifications for the original scope of work. If these projects had been properly bid, the school may have received a better price.
  • The school failed to initially disclose that it paid $14,254 to an architectural firm owned by a board member to prepare plans for building renovations.
  • The school also used $30,395 in state aid for school fund raising activities, which is not permitted.

Auditors recommended St. Mary’s:

  • Comply with SED guidelines and the school’s own policies for procuring goods and services, including requiring written specifications.
  • Repay the $30,395 in state funds used for fundraising activities.
  • Ensure the school’s counsel reviews all contracts over $10,000.
  • Ensure the board adopts a resolution prior to entering into leases.
  • Require the board to monitor the school’s compliance with policies and procedures.
  • Develop criteria defining major purchases and create dollar thresholds for when these purchases should be reviewed.

St. Mary’s took issue with some of the findings of the report but did agree with many of the audits’ findings and have taken or are taking steps to implement revised policies and procedures. The school’s response is included in the audit.

Officials from SED were provided the audit findings and indicated they recognize the need to strengthen their procedural guidance for state-sponsored schools on procurement practices and other fiscal issues.

Click here for a copy of the audit.


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