New York State Comptroller Thomas P. DiNapoli today announced his office completed audits of the Freeport Union Free School District, Island Trees Union Free School District, Ontario-Seneca-Yates-Cayuga-Wayne Board of Cooperative Educational Services (BOCES), Phelps-Clifton Springs Central School District, Wantagh Union Free School District, West Genesee Central School District and the Whitney Point Central School District.
“In an era of limited resources and increased accountability, it’s critical that schools make every dollar count,” DiNapoli said. “By auditing school district and charter school finances and operations, my office continues to provide taxpayers the assurance that their money is being spent appropriately and effectively.”
The district overestimated expenditures by a total of $36.5 million from July 1, 2012 through June 30, 2015, an average of more than $12.1 million per fiscal year. Additionally, the district reported year-end unrestricted fund balance at levels that did not comply with the 4 percent statutory limit for the past three fiscal years. When adding back unused appropriated fund balance, the district’s recalculated unrestricted funds were about 11 percent of the appropriations in the 2015-16 budget. The district also maintained five reserve funds with balances totaling $35.6 million as of June 30, 2015, four of which were overfunded.
The district does not have a comprehensive payroll policy or written overtime procedures. Auditors examined records relating to 346 overtime hours ($14,871) worked by the 10 custodial unit employees that worked 100 overtime hours or more in the fiscal year ending June 30, 2016. Auditors found no documentation that 314.5 overtime hours, totaling $13,321 had been preapproved by a supervisor.
Ontario-Seneca-Yates-Cayuga-Wayne Board of Cooperative Educational Services (BOCES) – Multiyear Planning and Software Management (2016M-249)
BOCES officials did not adequately use multiyear planning, which includes ensuring that reserves are appropriately established, maintained and supported. They did not develop formal, written multiyear financial plans, including a reserve plan that indicates their intentions for funding, using and accumulating reserve funds. BOCES officials also did not prepare a formal analysis of certain reserve funds to ensure amounts were appropriate for BOCES’ needs or include reserve funding in the annual budgets. Auditors also found that BOCES can manage its software more effectively and efficiently.
The board did not adopt realistic budgets or ensure that reserves were reasonably funded. District officials consistently overestimated expenditures during the last five fiscal years (2010-11 through 2014-15). These budgeting practices generated more than $3.5 million in operating surpluses. The district also appropriated an average of approximately $995,000 in fund balance annually, which was not needed to fund operations due to the operating surpluses. This practice allowed the district to appear that it was within the 4 percent statutory limit imposed on the level of unrestricted fund balance.
The board and district officials did not always effectively manage the district’s financial condition by ensuring budget estimates were reasonable and adopting realistic budgets based on historical costs and trends. As a result, the district overestimated expenditures by a total of $12 million from July 1, 2012 through June 30, 2016. Additionally, to stay within the year-end statutory limit for unrestricted fund balance, district officials appropriated a total of $9.4 million of fund balance. However, this appropriated fund balance was not needed to finance operations because the district had a total of $2.9 million in operating surpluses in three of the four fiscal years. When adding back unused appropriated fund balance, the district’s recalculated unrestricted fund balance exceeded the statutory limit.
The district has not established written policies or procedures for the cash receipts process at the district’s business office or for the food service department, which collects cash at the school cafeterias. Auditors found that the key duties of cash handling, recordkeeping and reconciliation are concentrated with one position. In addition, there was no process in place for someone independent from the recordkeeping function to verify that funds were deposited into a district bank account.
The board did not establish adequate policies and procedures to ensure receipts from all events were deposited, and the treasurer did not ensure the faculty advisors followed the established, informal procedures. A faculty advisor improperly deposited the money from a number of fundraisers and end-of-year contests into her personal account before remitting to the treasurer.
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.