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Audit

Mount Sinai High School. File photo by Barbara Donlon

Most people would be ecstatic to have millions of dollars put aside for a rainy day, but for school districts it’s not such a benefit, at least according to state law.

The New York State comptroller, who serves as a financial watchdog on public institutions, issued a report June 1 that said the Mount Sinai School District had amassed millions of dollars in its fund budget higher
than the legal max of 4 percent of the districts overall budget. Mount Sinai has said it intends to comply with the suggestions of the report, but some trustees said the restrictions on rainy-day funds only hamper the
district’s ability to handle its finances.

“We knew we couldn’t wait — those projects needed to be done now. I think that according to the [budget] vote the residents agreed with us.”

— Gordon Brosdal

“If you spent all the money you got every year, and then had nothing left, how fiscally responsible is that?” incoming board trustee Steve Koepper said.

The report said officials overestimated expenditures by more than $7.5 million and had underestimated revenues by $1.7 million from the 2014-15 through the 2016-17 school years. In the three years examined in the report, the district operated at a surplus and did not use any of its appropriated fund balance. This led to Mount Sinai’s unrestricted fund balance to be equal to 19.8 percent of the overall 2016-17 budget, way above the 4 percent limit.

The unassigned fund balance is developed from a school district having leftover, unspent funds by the end of each school year, and these funds accumulate. There are three levels to a districts total fund balance, including the restricted fund balance, which can only be spent for specific purposes like retirements; the appropriated balance, which is what the district sets up every year that can be spent from the overall funds; and the unassigned fund balance, or the unused portion. As of the 2016-17 school year, the district had $1.61 million appropriated and $9.9 million unassigned, according to the report.

Superintendent Gordon Brosdal said at the June 12 board of education meeting that talks with auditors have been congenial, and that they already have plans in motion to resolve the issue by using the funds in the already established capital project.

In the district’s 2018-19 adopted budget Mount Sinai residents voted 787-176 in favor of using $5 million of the unassigned fund balance to make repairs to the high school roof, upgrade the turf field and replace the campus’ perimeter fences, as well as other school security improvements. 

Mount Sinai Superintendent Gordon Brosdal speaks to community members about the state comptroller’s audit findings during a June 12 board of education meeting. Photo by Kyle Barr

“We hope that they will listen to our plan to spend down the fund balance, rather than just say, ‘No, your fund balance is too high,’” Brosdal said.

Brian Butry, a spokesperson for the comptroller’s office, said Mount Sinai is not the only district in the state that has been caught with a surplus of unassigned fund balance.

“We have districts in the state showing that they are using fund balance, but that money is not being spent,” Butry said. “You have districts planning for one thing that doesn’t materialize, or you have districts overestimating their expenditures and then just continually have this surplus that rolls over into the next year.”

According to Butry, the penalty for not complying with the comptroller’s report could be a withholding of state funds up to the amount that district’s fund balance is over the 4 percent limit.

Koepper works as the superintendent of buildings and grounds at Sayville school district, and he said that so many districts do not operate within the limit because it does not make financial sense to do so.

“To be imposed upon by the state ties our hands, because if emergencies occur what do you do?” Koepper said. “Especially because you’re not allowed to overspend your budget.”

“To be imposed upon by the state ties our hands, because if emergencies occur what do you do? Especially because you’re not allowed to overspend your budget.”

— Steve Koepper

Butry said the law is in place to keep school districts from having too much money on hand that’s not being put toward productive use. He added the comptroller’s office often recommends putting the surplus into a one-time expenditure or to use it in subsequent school years for reducing the tax levy.

Brosdal said the district had already planned to use the unrestricted fund balance for the capital projects months before the district received any news on the comptroller’s findings.

“We knew we couldn’t wait — those projects needed to be done now,” Brosdal said. “I think that according to the [budget] vote the residents agreed with us.”

In the letter to the state comptroller the district also said it would be establishing a capital reserve of $750,000 in an effort to reduce the unassigned fund balance. The district letter said there’s five-year-plan
effects that should reduce the overage by more than half, below the 4 percent limit, within two years. This will include tightening the amounts the district uses in fund balance appropriations for future school years.

Butry said that the comptroller’s office was largely satisfied with the district’s response so far.

“To their credit,” he said, “they did say they were putting this money to use.”

Suffolk Comptroller's audit of Walt Whitman Birthplace Association cites trouble with financial practices

Walt Whitman Birthplace State Historic Site and Interpretive Center. Photo from Facebook.

Suffolk County is seeking more than $21,000 in repayments from the nonprofit Walt Whitman Birthplace Association after an audit allegedly found multiple issues with its financial practices.

Suffolk Comptroller John Kennedy (R) performed an audit of the Walt Whitman Birthplace Association, a nonprofit organization that operates the state historic site and interpretive center in Huntington Station, after receiving an anonymous hotline complaint and tips from people he described as “those familiar with its operation.” The Jan. 19 report alleged the birthplace association overbilled the county by $24,365 in 2015.

“I have the utmost respect [for nonprofits]; they put in a tremendous amount of hours for benefit of the local community and educational community,” Kennedy said. “There is also a select segment who seem intent on gaming the system.”

We have a curator who was submitting his hours on the back of looseleaf paper.”

— Suffolk Comptroller John Kennedy

The comptroller said he found it “absolutely horrendous” the organization’s executive director doesn’t keep time sheets or oversight of employee hours, which were byproducts of the audit. Kennedy said despite selling tour tickets and running a gift shop, the organization had no point of sale system or manual bookkeeping. He said his staff also found an active credit card still in the name of a former trustee.

“We have a curator who was submitting his hours on the back of looseleaf paper,” he said. “It’s crazy, absolutely crazy.”

The association receives roughly half of its funding through Suffolk’s hotel motel tax, which sets aside 8 percent of the tax revenue for “the support of museums and historical societies, historic residences and historic birthplaces.” The organization receives 1.5 percent of that 8 percent set aside, under county law, for a total of $138,789 in 2015.

“We had hoped this would be a collegial and cooperative enterprise when they said they would audit us,” said William Walter, president of the organization’s board of trustees. “We thought we would find some improved procedures and not this type of report where they want to take money back from us that we need to run our programs.”

Kennedy said the nonprofit has 30 days to come up with a plan to repay the funds.

In response to the county, the organization has admitted to overcharging more than $2,000 in expenses but disputed most of the audit findings.

We had hoped this would be a collegial and cooperative enterprise when they said they would audit us.”
— William Walter

Walter said Executive Director Cynthia Shor is a salaried employee, not subject to time sheets under state law. The $2,587 disallowed by the audit for paid lunches to its part-time staff has been a standing company policy, according to the board president.

“We have no health insurance for employees, no pension, no benefits, no vacation,” he said. “The one thing we thought we could give them was a paid lunch hour, which is a half hour.”

The nonprofit board president also pointed to several policy changes enacted since 2015. An audit committee was formed in September 2017 to provide oversight of the organization’s finances and a point of sale system has been installed in recent months. That credit card in a former trustee’s name Walter said is slowly being paid off so the organization can close it out and replace it with a debit card.

The comptroller said he will be forwarding the county’s audit both to Huntington Supervisor Chad Lupinacci (R) and New York State Comptroller Thomas DiNapoli (D), as both provide funding to the organization. Huntington spokesman A.J. Carter confirmed the town gave $21,000 to the birthplace in 2017, an amount that has remained consistent since 2015.

Walter said the organization has hired an attorney, Melville-based Tenenbaum Law, to defend itself against the county’s allegations.

“We’d rather not have to take it to court or get into an adversarial position with them,” he said.

Town to send letter to New York State comptroller asking for review of town's finances

Huntington Supervisor Chad Lupinacci. Photo by Sara-Megan Walsh.

A request by Huntington’s new town board to have the state comptroller review the town’s finances was met with criticism.

Huntington Town Board voted 4-1 at its Jan. 3 meeting to go forward with a request to New York Comptroller Thomas DiNapoli (D) to conduct a review and audit of the town’s finances, policies and procedures. Councilman Mark Cuthbertson (D) was the sole vote against the measure.

“I just think this is a ridiculous waste of taxpayer money,” he said. “I think it’s a shot at the prior administration that had healthy financials and won a number of awards each year for the records we keep and our finances.”

In December, the Town of Huntington received its 17th consecutive certificate of achievement for excellence in financial reporting from the Government Finance Officers Association.  The nonprofit professional association serving nearly 18,000 government financial professionals across North America, had reviewed the town’s comprehensive financial report for the year ending Dec. 31, 2016.

I just think this is a ridiculous waste of taxpayer money.”
— Mark Cuthbertson

Councilman Eugene Cook (R), who sponsored the audit resolution, denied that it was a strike against former Supervisor Frank Petrone (D) and his practices, but rather a way to provide for a fresh start.

“Any business owner knows if they are buying a new business and going into a new business, they want to check all the records,” he said. “It’s as simple as that.”

Cuthbertson suggested given the lengthy time and funds it would require for the state to audit the town, the new administration and town officials would be better served by studying the town’s yearly internal audits performed by an outside contractor.

Cook sponsored a similar resolution in 2012 calling for state review, but it failed to gain the board’s approval. Petrone then offered a revised resolution that was approved, and ultimately resulted in a 2013 audit conducted by the state comptroller.

The 2013 audit report, which reviewed the town’s finances from Jan. 1, 2011, to May 31, 2012, found issues with the town’s ability to track overtime hours and paid leave for town employees adequately.

“We found that the town may have higher payroll costs than necessary because town officials did not monitor and control these costs,” states the 2013 audit’s summary findings.

Any business owner knows if they are buying a new business and going into a new business, they want to check all the records.”
— Gene Cook

The state comptroller’s office also found the town was awarding contracts to attorneys without going through the standard bidding process and then paid without providing detailed invoices in some cases. Recommendations were made and discussed between state and Huntington officials on corrective actions to be made.

“While serving as an affirmation of the policies that have helped Huntington maintain its AAA bond rating, we also appreciate the audit’s insight on how to make Huntington’s government operate even more efficiently,” Petrone had said in his response to the 2013 audit. “We will consider changes to implement the recommendations we have not already put into place.”

Councilwoman Joan Cergol (D), who worked for the town prior to 2013 and was sworn in to sit on the town board this month, voted in favor of requesting the state comptroller’s office perform an audit, though she said the measure was not necessary.

“I welcome an audit, but I don’t think it’s going to happen,” the councilwoman said. “If there is one, I think it will prove we run a tight ship.”

Supervisor Chad Lupinacci (R) said the resolution merely sends a letter to the state comptroller’s office to review the town’s financials “if they feel it is necessary,” to indicate the town would be both willing and cooperative in the process.

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The New York State comptroller said overtime was not monitored as efficiently as possible at schools, including Hauppauge Middle School. File photo

By Wenhao Ma

Hauppauge school district reportedly failed to efficiently monitor employee overtime to ensure that the district is incurring only necessary costs.

According to an audit report released by the New York State Comptroller’s office, the staff at Hauppauge did not fully comply with the district’s procedures for obtaining preapproval for overtime during a period from July 1, 2014 to Aug. 31, 2015.

The report said employees must obtain approval before working overtime, however there are not “adequate procedures in place to ensure overtime is pre-approved.”

Out of the select 15 payments that contained the highest amount of overtime pay in the report, none of the overtime hours worked had been preapproved.

The audit used one security guard as an example.

The chosen security guard worked 33.5 overtime hours and received overtime payments totaling $1,143 for “video room coverage.” According to the report, even though district timesheets provide space for supervisors to preapprove overtime, department and security office supervisors did not approve the overtime on the record before the work was started.

“New procedures will be created requiring overtime and the associated justification to be pre-approved by department supervisors,”  — James Stucchio

The report listed two recommendations for district officials: to implement procedures to approve and provide justification for overtime prior to the work being performed and review security staffing and to determine whether work shifts can be rearranged to incorporate video room coverage into a regular workday, instead of an employee monitoring cameras during off hours.

Hauppauge administration accepted the recommendations and promised to implement new measures within the next 90 days. The district said the current protocol is to approve overtime after the work has been performed, but they would look at reversing the process.

“New procedures will be created requiring overtime and the associated justification to be pre-approved by department supervisors,” James Stucchio, deputy superintendent, said in a response to the report. “This will protect the district from unauthorized extra work and allow for the possible rearranging of shifts to lower or eliminate the need for the overtime.”

Additionally, Hauppauge said it will review the shifts for the security staff in order to determine if coverage for monitoring the surveillance system and other related work can be incorporated into regular shifts, and examine if it needs to add a part-time staff member to lower or eliminate the overtime.

Superintendent Jim Polansky. File photo by Rohma Abbas

According to a New York State Comptroller’s report, Huntington school district has been overestimating their budget costs for the past three years.

Because of those miscalculated expenses, the recent audit says tax levies may have been greater than necessary from 2012 to 2015, resulting in the district collecting excess money from taxpayers that became surpluses in their fund balance.

“District officials consistently presented, and the board approved, budgets which overestimated expenditures for these three years,” state Comptroller Tom DiNapoli’s (D) report said. “As a result, district officials spent an average of approximately $4.7 million less than planned each year.”

A fund balance is the surplus of budget funds at the end of the year, which can be set aside as savings until the total reaches more than 4 percent of that year’s budget. According to the comptroller’s office, if the reserve is higher than that, the money must be spent to lower property taxes, pay for one-time expenditures or reduce debt.

To avoid exceeding that 4 percent, the district rolled over the excess fund balance with the alleged intent of using the funds to finance district operations in the next budget cycle — but according to the audit that never happened.

“Total actual revenues exceeded expenditures by as much as $4.1 million and no amount of appropriated fund balance was used to finance operations,” the audit states. “As a result, the district’s tax levy may have been higher than necessary to fund district operations.”

The comptroller’s office said that between the false rollovers and overestimated costs, Huntington school district appeared to be under the 4 percent maximum — when really it wasn’t.

“As a result, the board and district officials may not have adequately presented the district’s financial condition to its residents.”

The report recommended that the district “develop procedures to ensure it adopts more reasonable budgets to avoid raising more real property taxes than necessary.”

In a response letter to the comptroller’s office, Huntington Superintendent Jim Polansky explained his position on the report.

“Our budget is an estimated spending and revenue support plan,” Polansky said. “As such, the district will continue to appropriate fund balance at a level estimated to address a potential operating deficit, but will always strive to spend within budgetary constraints and access available revenues to offset that spending.”

Polansky cited increasing enrollment — due to the reopening of the Jack Abrams STEM Magnet School in 2013 and the opening of a housing development within district boundaries in 2014 — as the main drivers of increased budget appropriations.

School board President Tom DiGiacomo said Tuesday that the district would take all of the comptroller’s suggestions seriously.

“The administration and board have already taken and will continue to take the actions recommended by the comptroller in terms of responsibly analyzing historical trends in expenditures and revenue streams, while also considering fiscal uncertainties in particular areas,” he said in an email.

District administration and the board are in the process of drafting the budget for the 2016-17 school year. The next budget meeting is on March 21 at the Jack Abrams STEM Magnet School.

Brookhaven Town Supervisor Ed Romaine. File photo by Erika Karp

Brookhaven Town failed to fully abide by New York’s affordable housing law, according to a state comptroller audit.

The audit, released Jan. 8, singled out eight governments across Long Island, including Brookhaven, zeroing in on their compliance with the Long Island Workforce Housing Act. State Comptroller Tom DiNapoli (D) said the town “generally complied” with the act, but did not properly manage an optional trust fund set aside for affordable housing.

The Long Island Workforce Housing Act was passed in 2008 to require developers building five or more homes on a property to allocate 10 percent of their prospective residential units to affordable workforce housing units, meant for people earning up to about $105,000. The law also said that developers could avoid building affordable housing units by paying a fee to the town, which would be deposited into a trust fund for the purpose of building affordable housing.

The towns of Babylon, Huntington, Islip and North Hempstead and the villages of Hempstead, Farmingdale and Mineola were also evaluated in the audit. Each government either reached or exceeded the 10 percent affordable housing requirement, the audit said.

However, in the audit DiNapoli said Brookhaven adopted a resolution in August 2014 establishing a housing trust fund, but did not set up guidelines and procedures establishing how the expenditures from that fund would be used until September 2015 — which was later than the mandated six-month timeframe required to set up those rules.

The audit noted that “there have been no expenditures from the trust fund during the audit period.”

But Brookhaven officials said they did not agree with the comptroller’s assessment. Diana Weir, commissioner of Housing and Human Services in Brookhaven, said the town was in full compliance before the comptroller released the audit.

“The issue with Brookhaven is that we’ve never given a developer that option,” Weir said about the fees for the fund, which was not mandatory to create. “To us [making developers build the affordable units was] better because we are actually building the units. But just in case we figured we’d [establish] a trust fund.”

Town Supervisor Ed Romaine (R) said he was unhappy with the state’s assessment that the town only generally complied with the law. Because the town makes developers build affordable homes instead of paying to avoid the requirement, there isn’t any money in the trust fund account, Romaine said.

Of Brookhaven’s 924 housing units, 10 percent are affordable workforce housing units, according to the audit.

“What did Brookhaven do wrong?” Romaine (R) asked in a phone interview. “If Brookhaven required [developers] to build [affordable homes], why did we need a trust fund account? We’re actually fulfilling the law.”

In the preliminary draft of the audit, the comptroller suggested the town establish guidelines for the fund. That suggestion came several days after Brookhaven established rules for the fund. Despite this, the final audit didn’t reflect or acknowledge the change.

Brookhaven has always required developers to make affordable homes. During the recession, developers needed to allocate 20 percent of the residential units for affordable housing. Weir said purchasing affordable homes at the time was easier for prospective homeowners as prices of homes dropped. The town dropped the requirement to 10 percent once the market started improving.

“What the audit should have said is, ‘We recommend in the future that you set [the affordable workforce housing trust fund] up, but you’ve complied,’” Romaine said.

Cheryl Pedisich speaks at the podium after receiving the first-ever Administrator of the Year award from the New York State School Counselor Association. Photo by Andrea Moore Paldy

Three Village and other districts recently received the results of an audit conducted by New York State Comptroller Thomas DiNapoli of the 2014-15 finances relating to the district’s fuel inventory management.

The comprehensive, six-month review of the district’s 2014-15 finances found that the fuel inventory was “overstated by 452 gallons of gasoline and 297 gallons of diesel fuel, with a total value of $1,725.” 

That was a finding after a review of documents related to the district’s financial policies and procedures, including cash disbursements, payroll, fund balance and reserve management, cash flow to vendors, budget revenues and expenditures, among others.

Three Village board’s Audit Committee Chair Jonathan Kornreich said the state audit’s report accounts for nine-millionth of the district’s $188 million budget and amounts to about 2 gallons of gas per week.   

Assistant Superintendent for Business Services Jeff Carlson, who said he was “pretty happy” with the audit, added that the district has already addressed the comptroller’s recommendations.

The comptroller recommends that the board write procedures for reconciliation of fuel, that the inventory be reconciled more frequently and that odometer readings on trucks be entered before fuel is dispensed. Additionally, the state suggests that Three Village “address any physical security concerns of the fueling station,” such as repositioning security cameras. 

Changing Ward Melville?
In other news from Wednesday’s meeting, board trustee Jeff Kerman raised an uncomfortable issue involving a local legend. Kerman said he wants the board to consider having the district’s attorneys look into whether it is feasible to change the name of Ward Melville High school.

“I’m a little concerned about the name of our high school being named after an anti-Semite and named after a racist person,” Kerman told the board.

He said that Melville’s refusal to let Jews rent shops in the village or sell houses to blacks and Jews is not acceptable in today’s age.

This was the first time the topic has been broached. There were no public comments or discussion from the board.

Three Village superintendent collects major honor
Three Village teachers, administrators and staff gathered at the North Country Administration building last Wednesday to honor Superintendent Cheryl Pedisich.

Pedisich is the recipient of the first-ever Administrator of the Year award from the New York State School Counselor Association.

“We’ve realized how fortunate we are to have a truly outstanding educational leader,” School Board President Bill Connors said.

“It really is wonderful when an outside group comes and also affirms our own view of the superintendent and affirms the outstanding leadership that she’s provided.”

Pedisich, who had been nominated by Linda Bergson, coordinating guidance chairperson for the district, said she was honored to receive the award from an organization that represented her “origins as an educator.”   

The superintendent’s 32-year career in Three Village began at Ward Melville High School as a guidance counselor. That is, in fact, how she and Bergson first met — Bergson’s son was one of the students Pedisich counseled.   

Bergson read her nominating letter at Wednesday’s school board meeting. In it, she described Pedisich’s leadership as collaborative and respectful.  The school superintendent is a wonderful listener, she said.

“And if she asks you to do something, she will always offer to help you accomplish it,” Bergson said.

Besides being detail-oriented and taking a “holistic” approach to problem-solving, “her work product is impeccable,” Bergson’s letter said.

Pedisich was selected from administrators statewide by a five-member committee, said NYSSCA President Barbara Donnellan, who attended the meeting with Executive Director Robert Rotunda to present the award to the Three Village superintendent.   

She is a leader “who provides outstanding support to school counselors,” Donnellan said.

Pedisich’s counseling background is apparent in the way she works with students, parents, teachers and staff, Bergson said. She is able to find the right words to handle a situation and never makes anyone feel as though they’re taking up too much time, she added. Most impressive, though, is how Pedisich, who has been superintendent since 2012, acknowledges what people do and validates and praises their efforts, she said.

“It’s funny to watch her walk down the hall when she’s in the high school for a meeting, because she says hello to everyone by name — teachers, administrators, custodians, secretaries, security — she doesn’t just say hello, but she asks them questions that show that she knows them personally,” Bergson said.

Visibly touched, Pedisich thanked the “dedicated, skilled and talented” district staff, Three Village parents who are “invested in our children” and the school board, which she said “respects and values and demonstrates positive regard for all of its constituency.”

“I would not be in this position or the educator I am if it wasn’t for the people with whom I have worked,” she said.   

“I am incredibly indebted to all of you… This will definitely be one of the most special and indelible moments of my career.”

This version corrects the number of years Cheryl Pedisich has worked in the Three Village school district.

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Kings Park Central School District Superintendent Timothy Eagen says the district has already responded to recommendations made by the state comptroller’s office. File photo by Barbara Donlon

Changes have been made to the way that Kings Park Central School District officials track and record fuel usage for district vehicles, following an audit by the Office of the State Comptroller Thomas DiNapoli.

The comptroller’s report recommended that written policies and procedures be adopted to ensure that fuel inventory is measured and records maintained, especially when fuel is delivered or pumped. The district has approximately 62 vehicles, according to the report.

“New formal fuel accountability procedures were adopted and went into effect on Dec. 14, 2015,” Eagen’s response said. “The new formal fuel accountability procedures require that tank fuel levels be measured — morning and afternoon — and reconciled both daily and every 10 days. The procedures also require that any significant reconciliation issues be submitted in writing to the superintendent of schools.”

The audit was conducted from July 1, 2014 through July 31, 2015, but the results were given to the district back in December. 

“The district has embraced all of OSC’s recommendations, and as of today, all of these recommendations have been fully implemented,” said Timothy Eagen, Kings Park Central School District superintendent.

Eagen said in his statement that he was happy to report that fuel accountability was the sole focus of the audit, and not issues with the district’s budget overall. “This speaks to the high level of internal controls and budgeting procedures that are typical of the Kings Park CSD,” Eagen said.

Issues with the district’s tracking of fuel stemmed from sloppy record keeping, not a loss of fuel, which would indicate potential theft or environmentally dangerous leakage, Eagen said. 

“On both the diesel and gasoline forms, Department personnel entered the same beginning and ending inventory amount on multiple lines of the forms or entered the same beginning and ending inventory amount even when fuel use was recorded that day,” the report said. These forms were provided during the audit period, in lieu of the hand written notes that were the only real source of record keeping before the audit.

“District officials are responsible for establishing procedures to provide assurance that vehicle fuel is accurately accounted for and used for appropriate District purposes,” DiNapoli’s report said.

“To determine day-to-day use for each fuel pump, department personnel subtract the previous day’s pump reading from the current day’s reading and note the gallons pumped. No reconciliation was performed to determine if the gallons pumped agreed with the change in stick reading from one day to the next.”

Prior to the audit period, the fuel pumps and tanks at the district’s bus garage were monitored by security personnel 24 hours per day along with video surveillance, though no official written policies or procedures were in place to assist employees in accurate tracking of the fuel inventory. The comptroller also recommended that all employees who use fuel document the gallons pumped, vehicle and type of fuel.

Superintendent Michael Ring discusses the NYS Comptroller’s report with local residents. Photo by Giselle Barkley

Despite the New York State Comptroller’s audit report, Rocky Point school district is sticking to their guns.

Last week, on Nov. 19, New York State Comptroller Thomas P. DiNapoli released completed audits of four school districts, including Rocky Point. In the audit, he claimed that the school district exceeded the four percent statutory limit on its fund balance between July 1, 2013 and March 31 of this year.

According to the audit, during the 2009-10 to 2013-14 fiscal years, the Board at the time had accumulated $13.1 million. However, the district only used $1.2 million, and experienced a surplus in their unrestricted fund balance. Rocky Point’s Superintendent, Michael Ring, said this fund is utilized in emergency situations where the district cannot afford necessary expenditures — this includes funding programs or accommodating a special needs child, among other reasons.

Ring refuted the comptroller’s financial report.

“Bottom line for us is that if we were over the four percent, our external auditors would be required to report that,” Ring said in a phone interview.

But the Superintendent said no such claims were filed. He added that the Comptroller’s odd method of counting the school’s fund balance is unusual, as excess money from one school year is added to the previous year’s closing bonds.

Ring mentioned that the Comptroller acknowledged the district’s fund balance was below four percent within that time period. Now, the district is between 5.4 to 7.8 percent, according to the Comptroller’s report. Taxpayer dollars contribute to the district’s unregistered fund balance. An excess of money in this fund means taxpayer dollars go to waste. Ring assured meeting attendees that is not the case for the district.

For Rocky Point school board members, acquiring funds for the unrestricted fund balance is a guessing game. The school district must base their fund balance amount on possible future expenditures that the school may not be able to afford without this fund balance. Typically, the district budgets its money conservatively. The district’s actual expenditures are within 0.2 percent of what they budgeted.

Some community members weren’t phased by the Comptroller’s report. When asked about it, Rocky Point resident Mary Heely said she was surprised by the news. She stood by the Superintendent’s word that the district didn’t exceed the statutory limit of its unrestricted fund balance. With the failure of the district’s bond, Heely, like some other community members, had other financial issues on her mind.

“According to Mr. Callahan,” said Heely, referring to Rocky Point Board of Education member Sean Callahan, “we may be in serious trouble if there was a major event in this district. I think that’s the bigger concern at this point, as far as the lack of funds that could be necessary in the future.”

Commack Superintendent Donald James presented the district's 2018-19 budget draft. File photo by Greg Catalano

A state audit cracked down on the Commack Union Free School District, accusing officials of mishandling funds and costing taxpayers.

The audit, which was released Aug. 5, said Commack school administrators needed to do a better job overseeing the budgeting process after the district overestimated expenditures in its adopted budgets and did not use surplus cash to finance operations. The audit also found the district did not maintain a “complete and adequate” record of its fuel inventory to safeguard and account for its fuel.

“From 2011-12 through 2013-14, total actual revenues exceeded expenditures by as much as $3.7 million,” Comptroller Tom DiNapoli said in the audit, and while the district had a $24 million fund balance, it only used $1.8 million to offset taxes. “Had district officials used more realistic budget estimates, they could have avoided the accumulation of excess fund balance and possibly reduced the real property tax levy.”

The report also found that discrepancies in the fuel inventory records were not investigated. According to DiNapoli, Commack’s head groundskeeper performed a monthly reconciliation of district fuel purchase and use records with the actual fuel on hand but never acted on discrepancies, even though anything left unresolved within 48 hours must be reported to the state Department of Environmental Conservation.

In response, Commack Superintendent Donald James said the district had “varying fiscal philosophies” but cited a list of changes it would be implementing moving forward. As for the comptroller’s remarks on Commack’s financial condition, James kept it short and sweet.

“The district will review the expenditure budget areas and the variables affecting such areas discussed in the audit report in depth to assure reasonable estimates are presented,” he said in a statement.

District spokeswoman Brenda Lentsch said the district saves money through strong budgeting practices and all of its savings are returned to the taxpayers the following year.

“We go to great efforts not to spend the money the residents of this community entrust to us,” she said in a statement. “Further, the district returns every dollar not spent in the budget to the taxpayers to keep the tax levy as low as possible, and to continue to offer the multitude of programs and services that Commack is known for, and the community expects.”

On the subject of fuel inventory records, James had a lot more to say.

“The district has taken great care and effort to develop and implement new procedures to ensure that fuel supplies are adequately safeguarded, accounted for and protected against risk of loss or unidentified leakage,” he said in a response outlined within the audit.

Moving forward, James said the district would record, monitor and reconcile its fuel inventory via a senior account clerk and install video surveillance systems to monitor the area of the 2,500-gallon underground fuel tank and pump.

DiNapoli’s audit set out to evaluate the district’s overall financial condition and fuel inventory, specifically between July 1, 2013, and Nov. 30, 2014. The comptroller extended the scope of his audit back to July 1, 2011, however, to provide better perspective and background.

DiNapoli recommended the district develop procedures to ensure it adopts more reasonable budgets — to avoid raising more real property taxes than necessary — and use more of its surplus funds to support future budgets and reduce the burden on taxpayers. He also recommended the district adopt written policies to ensure fuel is periodically measured and to report discrepancies promptly.

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