Tag Archive | "audit"

Audit Critical About How School Collects Non-Resident Fees

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By Kathryn G. Menu

On Friday, the office of New York State Comptroller Thomas DiNapoli released a report critical of the Bridgehampton School’s efforts to collect tuition from non-resident students attending the school. The report finds that for two fiscal years the district charged some students less than the board of education’s approved tuition rates.

The audit, which looked specifically at non-resident students and the tuition they pay to attend the Bridgehampton Union Free School District, looked at the period from July 2009 through the end of October in 2010.

According to the report, 21 non-resident students attended the Bridgehampton School in 2009-10, while 19 attended the district in 2010-2011. That number represents 13 percent of the school’s 150-student population.

While the district could have charged $256,225 over the course of those two school years based on the Bridgehampton Union Free School District Board of Education’s tuition rates for non-resident students, according to the comptroller’s office it only charged $144,575 in tuition for those students. The report further states the district has collected $100,525 of the tuition charged by the school with a remaining $42,800 expected to be collected for the 2010-2011 school year.

A remaining $1,250 is “lost revenue,” according to the report, for one student because the district failed to collect an outstanding balance for the 2009-2019 school year.

According to the comptroller’s office report, one of the reasons for the shortfall in non-resident tuition rates came as a result of the school not properly billing the parents of a non-resident student in need of special education services.

In the 2009-2010 and 2010-2011 school years, the school board adopted tuition rates for non-resident students needing special education services at $34,343 and $104,157, respectively. However, according to the report, in 2008 a student who was classified as needing special education was given a tuition contract by then superintendent, Dr. Dianne Youngblood, and the school board that charged the regular non-student tuition rate of $15,000, which the district collected for the 2009-2010 and 2010-2011 fiscal years.

In a letter of response to the comptroller’s office, dated May 4, Superintendent Dr. Lois Favre, who took over the position last summer, notes that interviews with school staff indicated the student required less support than the special education tuition warranted.

Dr. Favre said the student in question received “minimal services in terms of special education support — including a special location for testing and some resource room (extra-help) support — which in our small school is available to all students.”

“Since there was no extra special education support needed for the student, it seemed that the general education rate (rather than the egregious special education cost) was more appropriate for this particular student,” stated Dr. Favre in the letter.

Dr. Favre added that the “lost revenue” reported in the comptroller’s report appears to be inaccurate, noting the district did continue to bill that student’s parents in the 2009-2010 school year and unlike the $1,250 reported, the district is now owed just $206.25.

The comptroller’s report also cited the board of education’s decided to waive a pro-rated non-resident tuition charge for a middle school student who completed three-quarters of the 2009-2010 school year before moving out of district. The report was critical, in this instance, of the fact that the district policy only allows tuition to be waived for students who move out of Bridgehampton while in their junior and senior years at the school.

In her response, Dr. Favre noted that the tuition contract signed with that student’s parents allowed for the tuition to be pro-rated for the time the student attended school at Bridgehampton.

“The statement in the policy regarding juniors and seniors refers to incidences when families of students who are juniors and seniors and have to move from Bridgehampton during their junior or senior year have the opportunity to permit their students to complete these two important years without the cost of tuition (in the best interest of the child),” she said.

“We will review our policies to be sure that they say what is meant, and we will assure that we continue to charge and bill for the appropriate rates moving forward,” added Dr. Favre.

On Monday, Dr. Favre said the audit was “conducted professionally and did what it was designed to do — assist us in continuing to assure efficiencies in all of our work in the district.”

Town Presents Police Audit Findings

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FTI Consultants, a firm hired by Southampton Town, has finally completed a forensic audit of the town’s police fund and the firm presented their astonishing findings at a town work session on Friday, July 17. Brian Ong, speaking on behalf of FTI, enumerated the myriad ways mismanagement of the town’s police fund monies lead to a near $4.6 million dollar deficit at the close of 2007. However, the silver lining to the team’s audit was a list of recommendations for the town moving forward, many of which have already been undertaken by the town to clean up their accounting practices.

FTI’s forensic audit analyzed the police fund from January 1, 2003 through December 31, 2007. Ong and his team spent several months interviewing town employees and wading through electronic records of the town’s financial documents. FTI hoped to piece together the town’s complicated accounting practices from this time period and unearth the cause of the fund’s staggering deficit.

At the start of 2003, the town’s police fund was enjoying a healthy fund balance of a little over $3 million. Due to unexpected and unbudgeted Patrolman Benevolent Association (PBA) settlements, normal and disability retirements, over allocation of police expenditures and other budgetary variances the fund balance was not only whittled away to nothing, but by the close of 2007 the police fund was in the red. Between 2003 and 2007, the town’s police fund overspent by around $8 million, though the fund’s surplus was used to augment this figure. In 2003 and again in 2005, the town paid around $2.5 million, in total, for retroactive PBA contract settlements, which Ong pointed out contributed to a substantial amount of the overspending in the police fund.

“Additionally, we noted issues caused by unanticipated retirements, unanticipated normal retirements as well as disability retirements. Each of which resulted in lump sum distributions of severance which were not budgeted for at adequate levels,” added Ong.

Beginning in 2003, the police fund operated at a deficit, yet taxes in the town’s police districts weren’t levied to pay off these responsibilities. According to Wright, the town raised taxes just enough to maintain operations, though not to address the fund’s indebtedness. Furthermore, new tax monies, added supervisor Linda Kabot, were sometimes used for the incorrect budgetary year, consequently masking the actual deficit of the fund.

“Money was coming in from property taxes and so forth, and it was really earmarked for next year’s budget but was being used for the current budget in order to make payroll, etc.,” explained Kabot.

Ong added that over-allocation of police expenditures further exacerbated the police fund’s predicament. According to Wright, certain expenses, such as dental insurance, optical insurance, and workman’s compensation was erroneously charged to the police fund, when it should have been charged to other town funds. Another facet of the over-allocations were certain expenses that were charged in 2007, when they should have been charged in 2008.

However, between 2003 to 2007, to help make the police fund whole at year’s end and continue operations, the town often loaned money from one fund, primarily the general fund, to the police fund which the town refers to as an interfund loan. Under state law, interfund loans must be paid back to the lending fund within a year’s time, and if the loan isn’t paid back after a year the loan begins to accrue interest.

“Some years these loans would be paid back with the new tax money, so technically the loans weren’t outstanding. However, the taxes weren’t budgeted for that,” pointed out Wright, who added that during her research she found that once the police fund was low on money a loan would often be given.

The previous town board, however, didn’t sign off on these interfund loans. Instead, noted Kabot, the function of giving out interfund loans was under the purview of the comptroller’s office. Ong said he wasn’t aware of a law, which prohibits this practice, but said it is a good management policy to make town board members aware of interfund loans.

Going forward, Kabot said it was necessary for the town to draft a repayment schedule for the police fund.

According to Wright, the town has already implemented procedural changes to circumvent a deficit of the police fund in the future. Wright said the town has improved digital financial accounting and enacted a new system by which to manage separate accounts for a particular fund. Earlier this week, Kabot presented a draft law mandating the town board to pass interfund loans by way of resolutions.