Meeting of the Board of Regents | February 2009

THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

TO:

Subcommittee on Audits

FROM:

Theresa E. Savo 

SUBJECT:

Board of Regents Oversight – Financial Accountability

DATE:

January 30, 2009

STRATEGIC GOAL:

Goal 5

AUTHORIZATION(S):

REGENTS SUBCOMMITTEE ON AUDITS

MEETING ROADMAP

Date:  February 2009

Time:  TBD

Location:  TBD

TOPIC

OUTCOME

WHO

MINUTES

Opening Remarks

Chair

3

Review Agenda/Minutes (Attachment I)

Approval

Conway

7

Completed Audits – Including a Summary of the Department’s Internal Audit Workgroup (Attachment II), Summary of Audit Findings (Attachment III), and Audit Report Abstracts (Attachment IV)

Questions answered

OSC and Department Audit Staff

30

Audit Trend – School District Fund Balance and Reserves (Attachment V)

Information

Department Staff

20

Office of the State Comptroller

Albion Central School District

√

√

Alexander Central School District

Amherst Central School District

√

Belfast Central School District

√

√

√

Belleville Henderson Central School District

√

√

Bellmore Union Free School District

√

√

√

√

Bellmore-Merrick Central High School District

√

√

√

Carmel Central School District

√

√

Cheektowaga Central School District

√

√

√

√

Copenhagen Central School District

√

Cuba-Rushford Central School District

√

√

√

Downsville Central School District

√

√

√

East Rockaway Union Free School District

√

√

* Elwood Union Free School District (footnote 5)

√

√

√

Floral Park-Bellerose Union Free School District

√

√

√

√

Hilton Central School District

√

√

Jordan-Elbridge Central School District

√

√

√

√

Niagara Falls City School District

√

Port Byron Central School District

√

Rome City School District

√

√

* Royalton-Hartland Central School District (footnote 4)

√

Sackets Harbor Central School District

√

Sherman Central School District

√

√

South Jefferson Central School District

√

√

√

South Orangetown Central School District

√

√

√

Spackenkill Union Free School District

√

√

√

* Unatego Central School District (footnote 1)

√

√

√

√

* Valley Central School District (footnote 2)

√

√

√

Walton Central School District

√

√

√

√

√

* West Seneca Central School District (footnote 3)

√

√

√

√

Westhampton Beach Union Free School District

√

√

√

√

Wilson Central School District

√

February 2009 Total

16

8

11

13

11

12

2

3

5

* Other:

1

Control Environment

2

Property Loss and Liability Reserve

3

Sale of District Property

4

Student Transportation Services

5

Summer Sports Program

May 2007 - April 2008

May 2008

June 2008

September 2008

October 2008

November 2008

December 2008

January 2009

February 2009

Running Total

Procurement

97

9

2

35

6

6

8

13

16

192

Capital Assets

18

0

0

1

0

0

0

0

0

19

Claims Processing

108

9

3

16

3

7

5

3

8

162

Payroll

107

13

2

24

5

7

10

12

11

191

Cash

80

13

3

21

4

4

5

5

13

148

Financial Reporting

64

5

1

15

3

8

5

8

11

120

Information Technology

100

8

1

25

6

11

11

10

12

184

Capital Construction

5

0

0

0

0

0

0

0

0

5

Extraclassroom Activity Fund

7

0

0

6

1

1

1

1

0

17

Segregation of Duties

47

4

3

6

2

2

1

1

2

68

Budgeting

9

1

6

1

1

0

1

1

0

20

Conflict of Interest

10

2

0

4

1

1

3

1

3

25

Fingerprinting

0

5

1

0

1

1

1

2

0

11

Other

7

2

5

19

4

17

1

23

5

83

Total

659

71

27

173

37

65

52

80

81

1,245

Office of the State Comptroller

Audit

Major Finding(s)

Recommendation/Response

Albion Central School District

Financial Condition and Internal Controls Over Purchasing

2008M-211

8th Judicial District

The District has routinely overestimated appropriations and underestimated revenues. Due to poor budget estimates, revenues exceeded expenditures by more than $5 million in total over the last five fiscal years, on an average total budget of about $27 million. The District also used a significant amount of the operating surpluses to improperly fund an “Other Post Employment Benefits (OPEB) Accrued Liability Reserve.” The balance in the account was $5.6 million.

The District’s appropriated fund balance was not used as intended because the District reported operating surpluses in each of the last five fiscal years. Had these practices not occurred, the fund balance actually would have increased.

Forty purchases (totaling $320,991) were tested, and it was found that District officials did not use competitive bidding for three purchases (totaling $40,115). The District staff often used purchase orders that were created after the purchase was made, without prior approval by the purchasing agent.

7 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding financial condition, and purchasing.

They have thoughtfully and deliberately, in open board meetings, incrementally funded this cost.

Alexander Central School District

Internal Controls Over the Extraclassroom Activity Fund

2008M-222

8th Judicial District

(Contract for Excellence District)

The District’s internal controls over the extraclassroom activity fund were appropriately designed and operating effectively. This was determined after reviewing the District’s policy manual, and testing support for cash receipts totaling $9,000, and disbursement activities totaling $5,650.

There were no recommendations.

Amherst Central School District

Employee Benefit Accrued Liability Reserve

2008M-227

8th Judicial District

An Employee Benefit Accrued Liability Reserve (EBALR) fund was first reported in the 2002-03 fiscal year; however, a board resolution was not adopted to establish such a reserve fund. The District is also not adhering to statutory requirements to separately account for and allocate interest earned to the EBALR fund. Further, the District began self-insuring for health insurance and determined that it would use the EBALR fund to provide funding for this purpose, which is not an appropriate use of the fund. The District also improperly used the EBALR fund to circumvent statutory limitations on year-end unreserved, unappropriated fund balance and has maintained a balance in the reserve fund that is greater than necessary to finance future obligations.

3 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the EBALR fund.

District officials agreed with the recommendations pertaining to the proper establishment of reserves, reducing the balance in the EBALR fund, and accounting for and crediting interest earned by the EBALR fund to that specific reserve fund. The District has indicated that they will initiate corrective action as soon as possible to address the recommendations.

Belfast Central School District

Internal Controls Over Selected Financial Operations

2008M-215

8th Judicial District

The District improperly compensated two employees by approximately $19,873. The treasurer also improperly calculated health insurance stipends and, as a result, six employees were overpaid by a total of $6,292. In addition, two employees were paid a total of $7,489 for health insurance stipends that they were not eligible to receive. Employees who benefited from these payments included the information technology (IT) coordinator ($17,873), the secretary to the building principal ($4,981), an account clerk ($2,532) and the district clerk ($2,508).

A board member had a prohibited interest in contracts between the school District and a grocery store in which the board member had a 50 percent ownership interest. During the 2006-07 fiscal year, the District paid over $3,200 to this business.

The BOCES employee serving as the District’s internal auditor is also not independent in performing the District’s internal audit function.

8 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payroll, interest in contracts, and the internal auditor.

The District agreed with the recommendations pertaining to the adoption of comprehensive policies and procedures for the payroll process, reviewing District employee compensation and overpayments, salary payments, health insurance stipends, interest in contracts, and the termination of the internal audit relationship with the BOCES employee.

District officials have indicated that they will submit a corrective action plan in order to enhance the internal financial controls of the District.

Belleville Henderson Central School District  Internal Controls Over Selected Financial Activities

2008M-183

5th Judicial District

The District has not adequately segregated duties over cash disbursements. The treasurer performs all cash disbursement duties, including bank reconciliations. District officials also do not review the computer audit log which increases the risk that unauthorized modifications or errors could occur and not be detected, which could result in improper payments. The treasurer was able to issue 169 checks, totaling $68,158 for claims that had not been audited and approved for payment by the claims auditor.

There were also weaknesses in the District’s recording and maintenance of fuel inventories. Perpetual inventory records for gasoline and diesel fuel were not properly maintained, and the District could not adequately account for the District’s fuel purchases.

6 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash disbursements and fuel inventory.

District officials generally agreed with the recommendations pertaining to developing tighter internal controls surrounding the segregation of duties, claims auditing, reviewing audit logs, policies over fuel inventory, limiting 24-hour access to fuel pumps, and perpetual inventory records. District officials have submitted their plan for corrective action.

Bellmore Union Free School District

Internal Controls Over Selected Financial Activities

2008M-240

10th Judicial District

The board appropriated $2,845,000 of fund balance at June 30, 2007 to reduce the 2007-08 tax levy. The remaining unreserved fund balance of $1,779,311 at June 30, 2006 represented over 6 percent (more than twice the amount allowed by law) of the $27.6 million budget for the 2007-08 fiscal year.

Although the treasurer and board president are board-designated signatories, they do not directly supervise the check-signing process, as required by Education Law. Instead, the board allowed the superintendent or the assistant superintendent to witness the affixing of the treasurer’s and board president’s signatures to all District checks.

The District also did not solicit requests for proposals (RFPs) for 15 of the 16 professional services providers reviewed totaling $331,000 during 2006-07. The board did not have written agreements with three of these 15 providers, who received payments totaling $25,684.

Finally, the District did not properly establish controls to ensure that employee access rights are based on their individual job descriptions, and access rights are not periodically reviewed as they should be. There is also no disaster recovery plan in place, or plans to follow to prevent the loss of equipment and data, and financial data tapes have not been tested and restored.

12 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding financial condition, cash disbursements, professional service providers, and information technology.

The District agrees with the recommendations pertaining to excess funds used to fund reserves, cash disbursements and claims, internal controls over cash disbursements, competitive bidding for professional service providers, and information technology policies. The District has indicated that they plan to initiate corrective action, if they have not done so already.

Bellmore-Merrick Central High School District

Internal Controls Over Selected Financial Operations

2008M-181

10th Judicial District

The District had reserved approximately $3.4 million more in its Employee Benefit Accrued Liability Reserve (EBALR) fund than its liability for compensated absences. The board president, treasurer, and District clerk did not maintain adequate control over their signature disks and rubber stamps, and the treasurer did not always accurately reconcile bank balances to District records.

Thirty-five claims were reviewed (totaling $232,909), and deficiencies were found with 12 of the 35 claims. For example, because the claims auditor did not perform a proper audit of claims, the District overpaid a rehabilitation facility and a bus company a total of $4,389.

Further, payments (totaling $693,932) made to nine professional service providers were reviewed. The District failed to use competition to solicit the services of any of these firms. The District also paid two of the nine professional service providers a total of $207,750 for services without a written agreement.

The District has not restricted access to IT assets, or restricted employee access to only those modules of the computerized financial software that were required by their job descriptions. The District does not have a disaster recovery plan or procedures to follow to prevent the loss of equipment.

16 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding financial operations, claims audit, professional service contracts, and computer data safeguards.

The District does not agree with the majority of the findings pertaining to the EBALR fund, the deputy treasurer allowing unauthorized checks to be processed, the check signing process, bank reconciliations being performed in a timely manner, bank statement reconciliations, and the payment of goods and services. The District also disagreed with the findings related to duplicated claims, professional service contracts, off site backup and disaster recovery for computerized data, and physical security over IT assets. The District has indicated that although they disagree with the recommendations, they will take corrective action, where needed, to implement the report’s recommendations.

Carmel Central School District

Internal Controls Over Selected Financial Activities

2008M-202

9th Judicial District

The District’s control over its special education service providers’ contracts were inadequate. Eighteen special education service contracts (totaling $527,000) were reviewed to verify that they were approved by the full board and properly signed. The board president approved and signed 14 of the contracts totaling $347,000, the director of pupil services signed 3 contracts totaling $153,000, and 1 contract for $27,000 was not signed at all. Because the whole board does not review and vote on the special education service providers’ contracts, the board cannot be assured that the services paid for were reasonable and legitimate. One employee’s contract was also amended so that she could get paid to work from home at an hourly rate, in conjunction with using her accruals, while on leave for three consecutive months.

District officials also failed to provide the oversight needed to ensure that District staff complied with the board’s purchasing policy and procedures. Forty-five purchase orders (totaling $621,000) were reviewed, and 17 purchases (totaling $142,000) were made using confirming purchase orders. Further, District officials did not adhere to General Municipal Law (GML) and the District policy when they entered into independent contracts for services (totaling $34,200). Special education service claims were not properly audited and submitted to the accountant for payment in a timely manner. District officials did not use competitive bidding for four purchases (totaling $140,000) and did not request competitive proposals before selecting six service providers who were paid a total of $1.2 million. In addition, the District did not obtain quotes for five individual purchases (totaling $42,000) that fell below the bidding threshold.

Finally, an effective procedure was not established to delete inactive employees from the active directory and the accounting system on a timely basis. Employees were also not required to regularly change their passwords to the active directory, and users were not automatically logged out from the system after inactivity.

12 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding board approval of contracts, procurement, and information technology.

The District has agreed with the recommendations pertaining to the board approval of contracts, conflict of interest, purchase orders, the submission of claims, the use of request for proposals, obtaining quotes, the internal claims auditor, and seeking reimbursement. The District has agreed to implement corrective action as soon as possible to address the recommendations.

Cheektowaga Central School District

Internal Controls Over Selected Financial Operations

2008M-164

8th Judicial District

The board has not provided for a proper audit of claims. Of the 75 claims examined (totaling $187,088), 61 claims (totaling $169,866) had one or more deficiencies. Twenty-five additional credit card claims (totaling $17,222) were tested, and 17 of those claims (totaling $13,994) had one or more deficiencies. Deficiencies included insufficient supporting documentation, no prior authorization for purchase, and no receipts.

Additionally, the District was regularly misusing purchase orders, and budgetary transfers contributed to departmental overexpenditures. Twelve of 53 functional unit accounts were overexpended by $1,308 to $466,740 during the 2006-07 fiscal year. In 2007-08, 20 of the 53 units were overexpended by $1,390 to $526,309.

Further, the 15 journal entries affecting cash that were tested (totaling $4,448,494) had deficiencies, such as no evidence of supervisory review/approval or lack of documentation. The treasurer also did not properly control the use of her signature place, and District officials did not provide adequate oversight of the bank reconciliation process, which resulted in bank accounts not being reconciled for at least two months.

Finally, the District improperly classified a contractor as an employee, and improperly enrolled this individual in the Employee Retirement System. District officials also did not consistently notify optional members of their right to membership, and improperly reported seven part-time employees as working full time.

13 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding claims processing, the purchasing order system and budgetary control, the treasurer’s duties, and retirement reporting.

District officials agreed with the recommendations pertaining to the audit of claims, the sufficient documentation and approval of claims, the distribution and use of credit cards, purchasing policies and procedures, the monthly review of budget status reports, the duties of the treasurer, timely bank reconciliations, journal entries and wire transfers. The District also agreed with the recommendations concerning printed checks, the classification of workers, and the Employee Retirement System.  The District has agreed to address the recommendations by implementing corrective action in order to enhance and strengthen internal controls.

Copenhagen Central School District

Internal Controls Over Non-Payroll Cash Disbursements

2008M-228

5th Judicial District

There were internal control weaknesses in the District’s cash disbursements operations that could lead to errors or irregularities occurring and not being detected. Detailed computerized records for non-payroll cash disbursements were not accurate, the duties of the treasurer were not adequately segregated, and payments were made prior to claims audit.

Twenty special aid fund checks (totaling $30,734) and ten capital fund checks (totaling $738,540) were not properly reflected in the District’s central records by entry in the computerized accounting system.

District management also has not established adequate internal controls over the cash disbursements activities of the treasurer, the business office clerk does not document her review of the journal entries, and the clerk’s bank reconciliation and review of journal entries does not include the appropriateness of electronic banking transfers. The treasurer lacked supporting documentation for several wire transfers and checks. District officials also did not have adequate assurance that the purchases were properly approved or that the goods and services were actually received by the District.

5 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding internal controls over non-payroll cash disbursements.

The District accepts the recommendations and findings of the report. There was no mention of corrective action.

Cuba-Rushford Central School District

Internal Controls Over Selected Financial Operations

2008M-188

8th Judicial District

The unreserved, unappropriated general fund balance at June 30, 2007 was over $2.6 million, or almost 13 percent of the $20.1 million budgeted for 2007-08 (nearly $2 million more than allowed by law).

The District reported $2.92 million in its Employee Benefit Accrued Liability (EBALR) fund at June 30, 2007, while District records indicated that compensated absences, which could be funded by the reserve, totaled only $2.52 million at that date, which was $400,000 more than the District needed in this reserve.

Internal controls over cash receipts also were not properly designed or operating effectively. The District did not properly secure cash or checks received in the mail, issue duplicate receipts when cash was received, or have procedures to adequately address the counting of cash.

Finally, the BOCES employee serving as the District’s internal auditor is not independent in performing the District’s internal audit function, because the District makes substantial payments ($3 million in 2006-07) for BOCES services.

7 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding financial condition, cash receipts, and internal audit function.

District officials agreed with the recommendations pertaining to the fund balance being more than the allowed percentage, the EBALR fund, internal control over cash receipts, and the BOCES independence issue and renewal of the inter-municipal agreement.

The District has agreed to submit a corrective action plan within the time allotted.

Downsville Central School District  Financial Operations

2008M-223

6th Judicial District

The District’s cafeteria fund’s financial condition has declined over the past five years. For four of the last five years, the fund has experienced an operating deficit and at June 30, 2008 the fund had a negative balance of $18,713. This happened because the cafeteria fund deficit was not realistic, properly monitored, or controlled. The cafeteria fund has also had to borrow money from other funds to pay bills and payrolls due to a lack of sufficient available cash.

Additionally, the District did not develop proper policies and procedures to ensure that cafeteria transactions were authorized and recorded properly. The cashier performed the majority of the cash collection duties and no one else verified the cash she collected. Computerized cafeteria data was also not safeguarded.

Finally, the board did not appoint an independent claims auditor in accordance with Department regulations. The board appointed a BOCES employee to serve as the District’s claims auditor for the 2006-07 and 2007-08 fiscal years. Thus, the board is not providing for an independent audit of claims by using the BOCES employee to perform the claims audit function.

10 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the cafeteria fund financial condition and appointment of the claims auditor.

The District has agreed with the recommendations pertaining to the need for financial improvements in the cafeteria fund, segregation of duties within the cafeteria fund, and recognizes the importance and responsibility of the internal claims auditor for a school district. The District has agreed to implement corrective action as necessary.

East Rockaway Union Free School District  Internal Controls Over Cash Receipts and Disbursements and Information Technology

2008M-197

10th Judicial District

At times, the board had not adopted the necessary policy guidance and, at other times, District officials did not properly segregate the treasurer’s duties in the business office. Further, wire transfers were approved after they were made. The director of finance and operations approved six wire transfers (totaling $ 1,069,304) between eight and ten days after the treasurer executed them. The account clerk also signed 320 extraclassroom fund checks (totaling $334,880) without the authorization to do so.

The District also has not implemented comprehensive information technology policies and procedures. The District does not have a formal security plan to provide guidance on the prevention of the loss of computer information or the prevention of unauthorized access to the system. There was also a lack of control over access to the District’s server rooms, and the District did not store its data backup tapes offsite. Finally, one employee had access to applications that were not necessary for her job responsibilities.

7 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash receipts and disbursements and information technology.

District officials agreed with the recommendations pertaining to the segregation of duties for the treasurer, bank confirmation after the execution of wire transfers, the designation of a treasurer to handle extraclassroom money, signatures on extraclassroom activity checks, computer access rights, District server room access, and the protection of data. The District has indicated that the majority of the recommendations were implemented as the audit was in progress. The District has taken action to address all of the recommendations contained in the report.

Elwood Union Free School District

Internal Controls Over Selected Financial Operations

2008M-192

10th Judicial District

The board did not exercise the proper oversight over the summer sports program. Not all revenues and expenditures (totaling $93,782 and $77,898 respectively) were included in the budget, and District officials did not ensure that all fees charged were appropriate. Additionally, checks and cash were collected at the home of a District teacher, rather than the business office. No record of students participating in the program was prepared, and no receipts were issued.

Further, all five claims for the summer sports program ($5,950) lacked adequate supporting documentation and several individuals were paid as independent contractors, rather than as employees through the regular payroll system.

In 2007, the board allowed an outside organization to run the summer sports program which it did not charge for the use of District facilities. The board did not pass a resolution to authorize the program, approve the use of buildings and grounds, or enter in a written agreement to run the program. Additionally, the program documentation submitted to the District listed two organizations, each doing business under the name of a third organization.

Internal controls over the procurement of goods and services also were not operating effectively. Professional services totaling $132,000 were procured from three providers without competition. District officials did not enter into, and the board did not approve, written contracts with two of these providers totaling $25,143. Six out of 20 purchase orders (totaling $17,428) were issued after the purchases were made with no indication that they were for emergency purchases.

Finally, the board did not establish appropriate IT policies and procedures, an acceptable use policy, nor a formal disaster recovery plan.

13 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the summer sports program, procurement of goods and services, and information technology.

District officials generally agreed with the recommendations pertaining to the summer sports program, the use of buildings and fields for summer use, confirming purchase orders and the procurement policy, written contracts with service providers, IT policies and procedures, user access rights, and a disaster recovery plan.

The District has agreed to implement corrective action as soon as possible to address the recommendations.

Floral Park-Bellerose Union Free School District

Internal Controls Over Selected Financial Activities

2008M-163

10th Judicial District

The former superintendent received salary increases totaling $40,887 that were not properly authorized, and annual excess payments totaling $123,164 for unused vacation days, inaccurate conversion for unused sick days, and improper retirement payment. The District paid the former superintendent more than the terms of his contract.

The 2006-07 fiscal year budget prepared by the superintendent and approved by the board appropriated only $1,660,000 of fund balance to reduce tax levy. The remaining unreserved fund balance of $3,667,348 represented approximately 16 percent of the $23.5 million budget for 2006-07. The District’s unappropriated fund balance for the four fiscal years ended June 30, 2004, through 2007, exceeded the statutory limitation in each year.

The food services director did not reconcile moneys received, as reported by the cafeteria’s computerized cash register system, with the actual cash collected and deposited; therefore, variances were not identified and followed-up on. It was also noted that approximately 24 percent of the deposits were made between four and seven days after the money was collected.

Finally, there were weaknesses in password security. The District also did not implement procedures to ensure that backup tapes were stored in a secure off-site location, and there was no disaster recovery plan.

20 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding payments to the former superintendent, financial condition, cafeteria receipts, and information technology.

District officials disagreed with many of the recommendations pertaining to the payments to the former superintendent and the fund balance increase. The District did, however, agree with the recommendations regarding cafeteria receipts, school breakfast and lunch programs, and information technology. The District has indicated that initiatives to amend the concerns have begun, and will continue to take place in the future.

Hilton Central School District

Internal Controls Over Purchasing and Payroll

2008M-205

7th Judicial District

Although the board has adopted a purchasing policy, the policy does not address the procurement of professional services. Twenty-two vendors which provided professional services were tested to determine if the District had solicited competitive proposals or other forms of competition for the services, and if the District had entered into written agreements with each vendor. Twenty-two vendors were paid a total of $1,053,000, and the District solicited request for proposals for only 2 of the 22 vendors. There were also no written agreements for 6 of the 22 vendors.

The procurement of professional services for one individual under an agreement for “staffing and consulting services” may have been unconstitutional and a means of circumventing the earnings limitations for retirees, rather than providing cost effective services for the taxpayer.

6 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding professional services, and payroll expenditures.

The District agreed with the recommendations pertaining to written agreements and the competitive proposal process for vendors, proper documentation, overtime expenditures, and collective bargaining agreements. The District has indicated that they will initiate corrective action in a timely and effective manner.

Jordan-Elbridge Central School District

Internal Controls Over Selected Financial Operations

2008M-208

5th Judicial District

The treasurer receives cash, prepares and makes deposits, enters information in the computerized accounting system, prepares journal entries, and reconciles bank statements which does not represent the proper segregation of duties.

Further, the assistant superintendent holds incompatible positions as deputy treasurer, purchasing agent, and payroll certifier because the combined duties give one individual the capability to create a purchase, authorize that purchase, and then make the payment for that same purchase. As payroll certifier, he was also authorizing himself as deputy treasurer to pay the payroll. Fifty payroll disbursements (totaling $67,604) were not on a certified payroll, and there was a $1,158 overpayment to a District employee.

The assistant superintendent also has full user access rights in the computerized accounting system, which includes the ability to add and delete employees, adjust pay rates, post journal entries, and assign various levels of user access to the system for other District employees.

5 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding treasurer and deputy treasurer duties, and internal controls over financial computer data.

District officials agreed with the findings pertaining to internal controls over the District’s cash assets and computer data, cash receipt and disbursement duties and oversight, payroll disbursements and the District employee’s overpayment. The District also agreed with the recommendations pertaining to user access rights to the District’s computerized accounting system. The District has indicated that they are currently in the process of developing a corrective action plan in response to the recommendations.

Niagara Falls City School District

Internal Controls Over Health Insurance

2008M-111

8th Judicial District

(Fiscal Concern)

Enhanced benefits were provided contrary to contract stipulations, or the basis for the benefits could not be adequately determined by review of the contract provisions. These actions will result in unnecessary and inappropriate payments which are projected to total $2 million for the 2007-08 fiscal year. Additionally, 23 retirees also inappropriately received incentive payments totaling $21,250, 5 retirees received health insurance they were not entitled to, costing $44,339, and 7 administrators inappropriately received certain insurance coverage costing the District $14,440.

Further, 14 retirees or spouses continued to be insured by the District, even though they were deceased, costing the District approximately $114,000. District records also did not always match vendor records resulting in billing errors. The District was mistakenly billed $5,314 for two individuals who were not receiving health coverage.

14 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding inappropriate benefits and health insurance billing.

District officials disagreed with the recommendations pertaining to Medicare eligible retirees, and Medicare eligible retirees incentives, and retirees who do not qualify for insurance. The District also disagreed with recommendations made regarding retirees given special memorandum of agreement, employees receiving family benefit dollars, and long term care insurance. The District will address the items reviewed in the report, and, within the constraints of its contractual obligations and the law, correct any deficiencies that may exist. They have indicated that an appropriate corrective action plan with be prepared and filed in a timely manner.

Port Byron Central School District  Financial Condition

2008M-206

7th Judicial District

The District’s Employee Benefit Accrued Liability Reserve (EBALR) fund, and the Unemployment Insurance Reserve fund were both overfunded by $1.3 million and almost $214,000, respectively. This would have increased the District’s year-end accumulated fund balance to 12 percent of the 2007-08 fiscal year budget, or four times the legal limit of 3 percent. 

Because District officials funded the reserves at the recommendation of the District’s external auditor, in order to help reduce the year-end available fund balance to legal limits, the taxpayers have paid more than necessary to sustain District operations.

2 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding reserve funds and the external auditor.

The District has indicated that legislators will work with the Governor to find a solution that will acknowledge the Governmental Accounting Standards Board requirement to find a solution, and when they do so, the concern will become moot.

Rome City School District

Internal Controls Over Purchasing, the Claims Audit Function and Fuel Purchases

2008M-119

5th Judicial District

The director of facilities and the school grounds supervisor were able to initiate purchases through requisitions, receive the items, submit the invoices for payment, and convert the items to their personal use, or the personal use of others. Authorities confiscated eight assets (totaling $9,500) during their investigation, after finding the items off District property in the private possession of the school grounds supervisor or other individuals.

On several occasions, the director of facilities and the school grounds supervisor also circumvented internal controls by asking vendors to submit false invoices (totaling $3,672).

There was also $9,500 in equipment purchases that were improperly made using blanket purchase orders, $50,000 in purchases that did not match item descriptions on the related purchase orders, and over $73,000 in purchase orders that were issued after the purchases were already made.

Twelve contracts (totaling $253,825) were reviewed, and it was found that the District did not comply with bidding regulations for five of the contracts (totaling $92,570). The District also did not follow it’s procurement policy for nine of these contracts (totaling $77,957).

The District’s claim audit function was also inadequate. The claims auditor was not provided with copies of District policies, and he did not direct his policy-related questions to the board. Further, $11,250 in security consulting services was not approved by the board, 11 claims (totaling $92,652) were improperly paid prior to audit, and there was no indication that the claims auditor approved 6 claims (totaling $13,119). Finally, 10 claims (totaling $3,585) did not comply with District policies, a fuel claim for $85,890 contained no documentation that the fuel was actually received, and 12 claims totaling $21,496 lacked required itemization.

Additionally, the District contracted with a vendor to provide student transportation during the school year, who ordered diesel fuel for the District that was delivered to the contractor’s fuel tank and billed to the District. However, because the District did not have a process in place to verify receipt of the delivery, the District paid for 8,000 gallons of fuel (totaling $16,564) that was never received. The District has since been issued a credit for the amount.

District officials also did not request or receive adequate fuel consumption reports and supporting documentation to monitor the District fuel usage in the 2006-07 fiscal year.

Finally, the District could have saved $4,785 by purchasing unleaded gasoline directly off State contract, rather than trading the contractor diesel fuel for unleaded gasoline.

15 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding purchasing, the claims audit, and fuel purchases.

The District agreed with the recommendations and findings pertaining to the use of blanket purchase order accounts, competitive bidding requirements, inventory control and district management of fixed assets, claims audit, encumbrances, and the delivery and usage of fuel, including the provision of accurate and timely records and reports. The District has indicated that they will initiate corrective action in order to improve internal controls in all areas.

Royalton-Hartland Central School District  Internal Controls Over Student Transportation Services

2008M-209

8th Judicial District

District officials did not compare the information on the monthly invoices submitted by the transportation vendor to the daily vehicle inspection reports to determine if the amounts billed were accurate. In addition, the vendor used the District-contracted buses to transport District students and students from neighboring Districts on shared bus routes to the same academic locations outside of the District. Although the vendor billed all the districts for these shared bus routes, they were not addressed in the District transportation contract.

District officials also did not verify that the amount of fuel purchased for the transportation vendor was actually used on transportation services provided to the District. Because the vendor used District contracted buses to transport District students and students from neighboring Districts, the District incurred the cost of the fuel used on the eight shared bus routes. The cost was not charged to any of the other four Districts, and there was nothing in the contract to indicate that the District will be reimbursed or credited for the fuel used on the shared bus routes.

Due to the control weaknesses, the amounts that the District paid for the eight shared bus routes were reviewed, and it was determined that the transportation vendor overcharged the District.

8 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding student transportation services.

The District is in agreement with the recommendations pertaining to assuring that amounts billed are accurate and reasonable, the allocation of costs between Districts, monitoring the use of fuel, and amending the transportation contract to address the use of duel for shared bus routes. Additionally, the District agrees that it should seek reimbursement from the vendor for the fuel for shared bus routes, verify reasonableness of route times, and consider requesting additional credits for shared bus routes. The District is currently in the process of preparing a corrective action plan to outline how it will implement the audit recommendations to improve operations of student transportation services.

Sackets Harbor Central School District

Internal Controls Over Claims Processing

2008M-201

5th Judicial District

The District had inadequate controls in place to ensure that all claims paid were audited prior to payment during the 2006-07 fiscal year. The claims auditor did not certify warrants for the $32,705 disbursed from the Special Aid Fund or for one of the two capital fund warrants (totaling $197,770). The business office also did not prepare warrants for any of the 26 claim payments (totaling $32,705) disbursed from the Special Aid fund during the 2006-07 fiscal year. There was no evidence that any of these 30 claims (totaling $230,475) had been presented to the claims auditor and properly approved for payment.

1 recommendation

The report’s recommendation focused primarily on strengthening the policies and procedures regarding claims processing.

The District agreed with the recommendation pertaining to providing sufficient written control policies and procedures to ensure an effective claims audit function, the internal controls over claims processing, and finally, the payment of claims by the treasurer. The District has indicated that they have already addressed and rectified the recommendation.

Sherman Central School District

Internal Controls Over Payroll Expenditures and Financial Condition

2008M-189

8th Judicial District

The District has not established the appropriate policies or procedures to guide the payroll process, and did not monitor payroll expenditures to ensure that they were made in compliance with authorized contracts and salary agreements. As a result, the District paid almost $31,000 in unauthorized salary and benefits. The District made inappropriate payments to certain employees (totaling $ 15,555) for days they did not report to work. The District also improperly paid $14,940 in separation and insurance payments to the former superintendent, and paid the payroll clerk $479 for accrued vacation leave, to which she was not entitled.

The board has not adopted a realistic budget, and has not addressed excessive fund balance in the general fund. As of June 30, 2007, the unreserved, unappropriated fund balance totaled $795,197. This amount was more than 10 percent of the following year’s appropriations. The District also reported $405,952 in two of its reserves, while related benefit payments were made from the general fund rather than utilizing the reserves to fund these costs.

7 recommendations

The report’s recommendations primarily focused on strengthening the policies and procedures regarding payroll expenditures, and the financial condition.

The District agreed with the recommendations pertaining to holiday pay and wages, payroll duties and personnel, the business manager and payroll payment, fund balance, and fiscal budgeting. The District has agreed to implement corrective action and review policies in order to address the recommendations.

South Jefferson Central School District

Internal Controls Over Selected Financial Activities

2008M-210

5th Judicial District

The deputy treasurer performs the majority of key cash disbursements duties without effective oversight or mitigating controls.

Additionally, there were control weaknesses in the payroll process that existed during the audit period, which District officials have since corrected. However, because of these weaknesses, there was an increased risk of inappropriate payments being made and not detected.

Finally, District officials had not ensured that security measures were in place to safeguard District data.

4 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash disbursements, payroll, and information security.

The District has agreed with the recommendations pertaining to the segregation of duties for banking responsibilities, the treasurer’s facsimile signature, and reviewing printed checks. The District has agreed to implement corrective action, if they have not done so already.

South Orangetown Central School District  Internal Controls Over Selected Financial Activities

2008M-185

9th Judicial District

The District had a lack of sufficient controls over financial information and student data applications, primarily due to the lack of policies and procedures. As a result, password and log-in security requirements were not adequate. Some business office employees also had user rights that were not consistent with their duties, weakening the segregation of duties within the financial software application. The treasurer, deputy treasurer, and payroll clerk all had user rights that were not consistent with their job duties. Additionally, computer system user rights for nine former employees were not terminated in a timely manner, when they left District service. There were no instances of impropriety found; however, inadequate controls over the IT system leave the District vulnerable to system misuse.

There were also instances where control weaknesses allowed custodial employees to receive overtime pay without the required supporting documentation, or prior approval. There was no supporting documentation to show that five employees (paid a combined total of $42,816), received approval prior to working overtime. The District also paid five other employees (a total of $5,153) overtime with no evidence that they actually worked the hours they were paid for.

Additionally, District officials did not use request for proposals  or other forms of competition to obtain the services of seven service providers. Payments to the providers totaled $48,700. The District also failed to enter into formal contracts with four of the seven professional service providers, to which they paid $30,900.

Finally, it should be noted that the District has appropriately established and is properly maintaining their Employee Benefit Accrued Liability Reserve (EBALR) fund. In 2007, the EBALR fund had a balance of $733,227.

10 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding information technology, overtime, professional services, and the EBALR fund.

The District agreed with the recommendations pertaining to computer user rights and the segregation of duties, the authorization and notification of changes to user access rights, physical security, data backup, overtime pay, professional services and procurement, and the EBALR fund. The District has agreed to implement corrective action in order to improve and strengthen controls in the District, and to ensure the assets of the taxpayers are safeguarded and protected at all times.

Spackenkill Union Free School District

Internal Controls Over Selected Financial Activities

2008M-194

9th Judicial District

The District did not properly segregate claims auditing duties because the deputy claims auditor is also the secretary to the assistant superintendent for business, and is, therefore, performing incompatible duties. The board, rather than the claims auditor, was also auditing capital fund claims, which is not in compliance with the law, and since expectations were not properly communicated to the claims auditor, the District’s claims auditing process is inadequate. There was a lack of supporting documentation for claims, and some purchases were made without prior approval. The treasurer also did not maintain control over her facsimile signature. Further, the District made separation payments to two employees that exceeded the amounts allowed by their contracts by $17,839. Several budget transfers were also not properly approved.

Additionally, the District could save taxpayers approximately $30,000 per year in check printing costs by printing checks in-house.

Finally, the District did not securely store its backup data files and did not have a formal disaster recovery plan for its information technology.

14 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding cash disbursements, purchasing, and information technology.

The District agreed with the recommendations pertaining to reassigning the deputy claims auditor position, providing written job descriptions, adequately documented claims, the treasurer’s facsimile signature, labor contracts, vacation leave, budget transfers, purchasing procedures, check printing, and backup data policies. The District has indicated that they will implement corrective action as soon as possible, if they have not done so already.

Unatego Central School District

Internal Controls Over Selected Financial Activities and Information Technology

2008M-152

6th Judicial District

District officials did not establish adequate purchasing policies and procedures. The informal procedures that were implemented by the District were not properly documented or followed. As a result, the District did not solicit quotes for 11 of 15 purchases selected for testing (totaling approximately $36,400). The District also failed to establish adequate procedures regarding the proper use of blanket purchase orders. Further, the District did not use the request for proposal (RFP) process to solicit competition for its annual financial statement audit.

District officials did not implement formal policies relating to software user access and passwords, and they have not established a formal disaster recovery plan.

Finally, the board did not appoint a claims auditor in accordance with the Department’s regulations. The BOCES employee who provided significant services to the District, was also the employer of the claims auditor. Two BOCES contractual payments were also not supported with the appropriate documentation.

12 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding control environment, purchasing, information technology, and the claims auditor.

The District agreed with the recommendations pertaining to management and oversight of the District’s financial operations, guidelines for purchases and competitive bidding, the purchasing agent, blanket purchase orders, and the solicitation of RFP’s. The District also agreed to amend policies concerning user access rights to the computerized financial system, the use of passwords, network protection, backup data, and the independent claims auditor’s review of claims. The District will implement corrective action in order to ensure better oversight of the fiscal operations within the District.

Valley Central School District

Internal Controls Over Selected Financial Operations

2008M-182

9th Judicial District

(Contract for Excellence District)

The board did not ensure that claims against the District were properly audited. District officials established the reserve and funded it with excess fund balance, totaling over $2 million, at the end of the 2005-06 fiscal year, to cover unanticipated shortfalls in State revenue. This is not a proper use for a Property Loss and Liability Reserve (PL&L). The $2 million should have been used to pay off debt or to pay for non-recurring expenses as well as to fund 2006-07 expenditures.

The District is also failing to adhere to the General Municipal Law or its own purchasing policy. The District did not issue requests for proposals for professional service providers, as required by their policy, for seven of the eight service providers tested (totaling $1,177,000).

Finally, the District did not have an effective claims auditing process. The claims auditor was not independent of the business office function, and did not perform a thorough review of all claims before approving them for payment. Twenty-four claims (totaling $321,000) did not have sufficient supporting documentation. Another 13 claims (totaling $614,000) were paid without claims auditor approval.

6 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the Property Loss and Liability Reserve, purchasing, and the claims auditor.

The District agreed with the recommendations pertaining to spending reserve funds, request for proposals, competitive bidding requirements, and the claims auditor’s independence from the business office. The District has indicated that corrective action will be implemented as soon as possible to address the recommendations.

Walton Central School District

Internal Controls Over Selected Financial Activities

2008M-217

6th Judicial District

The board did not ensure that its members publicly disclosed the nature and extent of any direct, or indirect financial interest in accordance with the board’s adopted ethics policy. Thus, the board’s vice president had interests in contracts with the District that she did not publicly disclose, and that the board failed to identify.

District officials paid ten claims (totaling $583,160) for repairs, without advertising for bids. The District also failed to seek competition and maintain proper supporting documentation for $7,700 purchased from a corporation co-owned and operated by the spouse of the vice president of the board. There was also a failure to ensure that District employees submitted charge receipts to the business office, and there was not an adequate review of fuel usage logs.

Additionally, the cafeteria manager did not implement policies and procedures over cafeteria operations to ensure that all cafeteria monies were recorded and properly accounted for. There was an insufficient oversight of cafeteria cash collections and an inadequate segregation of duties.

There was also an insufficient segregation of duties over non-payroll cash disbursements. The accounts payable clerk’s duties were not properly segregated, and there were no mitigating controls in place.

Finally, there were weaknesses in the District’s controls over the classification of employees. As a result, District officials improperly classified an attorney as a District employee.

15 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding conflicts of interest, purchasing, cafeteria receipts, the segregation of duties, and the classification of employees.

The District agreed with the recommendations pertaining to interest in contracts, properly bidding for purchases, the fuel card policy, the free and reduced lunch program, the duties of the claims auditor, and employee classification of the school attorney. The District has indicated that they will initiate corrective action to improve upon the District financially.

West Seneca Central School District

Internal Controls Over Selected Financial Operations

2008M-214

8th Judicial District

District officials did not provide sufficient guidance to the network coordinator for the management of information technology (IT) inventory, or establish policies and procedures regarding the disposal of IT equipment. IT inventory records were incomplete and inaccurate. Items were removed from the IT inventory records but were still being used by the District, recorded in the inventory records, but were missing, or had been removed from the inventory records without proper authorization.

Additionally, certain payments were not supported by a written agreement on file to evidence the terms and conditions of the relationship between the District and the vendor and certain contracts that we reviewed were not approved by the board.

The District also did not provide reasonable public notice of the sale of District property located at 675 Potters Road. Although activity related to the sale of this property began in 2006, the board did not formally identify the property as of “no use or value” until April 2008, and only in its board meeting minutes. In the same meeting, the final contract for sale was also authorized by the board. The District did not publish a notice in their official newspaper disclosing the declaration of the property as of “no use or value,” or the terms of the sale which would have allowed District taxpayers to be aware of their right to petition for a referendum and have the matter brought to a vote of the District’s qualified voters. As a result, District voters were not afforded the opportunity to petition for a vote.

The board also did not provide detailed guidance or prescribed procedures to the claims auditor. Forty claims were examined (totaling $68,494) for authorization, documentation, and evidence of receipt.

8 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding information technology inventory, purchasing, sale of District property, and claims processing.

The District agreed with the recommendations pertaining to inventory control for information technology, equipment control deficiencies, the District’s purchasing agent, obtaining quotes, proper documentation, contracts, and the sale of District property. The District has indicated that they will implement corrective action, and they have already taken many of the necessary steps to address the recommendations.

Westhampton Beach Union Free School District

Internal Controls Over Selected Financial Operations

2008M-193

10th Judicial District

On June 30, 2007, the balance in the District’s Employee Benefit Accrued Liability Reserve (EBALR) fund was $5,285,118. The District’s audited financial statements showed that the total liability for compensated absences was only $4,125,656 at June 30, 2007. Therefore, the excess in the EBALR fund totaled $1,159,462.

Additionally, District officials did not have adequate controls over changes made to capital projects. As a result, changes to the general construction contract for the high school project, in the amount of $114,502, which were not within the scope of the original contract, were awarded without the solicitation of competitive proposals. Further, work on three change orders (totaling $213,618) were started before the board had authorized the changes.

There was inadequate segregation of duties in the treasurer’s office with the payroll clerk. She also used the treasurer’s signature disk to sign employee paychecks.

Finally, there were inadequate controls over information technology. The District’s control over passwords and access controls were weak, and data was not backed up in a secure off-site location.

10 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the EBALR fund, change orders, the treasurer’s operations, and information technology.

The District agreed with the recommendations pertaining to planned funding for the EBALR fund, payment of benefits, capital project planning and analysis, change order approval, the segregation of duties of the payroll clerk, and information technology security. The District had indicated that they will initiate corrective action shortly, if they have not done so already.

Wilson Central School District

Internal Controls Over Financial Condition

2008M-203

8th Judicial District

District officials did not prepare a reasonable budget for the 2004-05 through 2007-08 fiscal years. The District consistently overestimated expenditures and underestimated revenues, and made budget transfers far in excess of budgeted amounts disclosed to voters. As a result, the District operated on surpluses totaling $7.6 million during this period. The District is also holding $3.2 million in the debt service fund, most of which has no identifiable purpose. Approximately $2 million in taxes were unnecessarily levied in the 2007-08 fiscal year alone. The District will have an operating surplus of about $2 million for the 2007-08 fiscal year.

The District inappropriately assumed that retirement incentives could be charged to the Employee Benefit Accrued Liability Reserve (EBALR) fund. The amount of compensated absences on the District’s schedule that could be funded from the reserve totals only $535,000. As a result, the District overfunded the EBALR fund by approximately $560,000. The District inappropriately paid about $111,000 from this reserve fund for retirement incentives.

The District also overestimates salary appropriations. The District has received an average of $580,000 in grant funds each year, and it uses special aid fund monies, rather than general fund monies, to pay for certain District salaries. However, the District still budgets to pay these same salaries out of the general fund, and therefore an average of $461,000 each year in salaries were overestimated. The District also overestimated hospital and medical insurance appropriations by about $283,000 each year.

7 recommendations

The report’s recommendations focused primarily on strengthening the policies and procedures regarding the financial condition.

The District agreed with the recommendations pertaining to budgeting procedures and appropriations, balances in the EBALR fund, the Insurance Reserve, transferring money, and the fund balance. The District did, however, state that they maintain that their primary objective is to minimize the cost of delivering a high quality education to their children over a period of time encompassing several years, and the District’s current budgeting practice has resulted in savings to the taxpayers. The District has indicated that they will implement corrective action, as necessary, to address the recommendations.

Reserve Fund

Authorized by:

Purpose

School Districts

Repair

GML* §6-d

To pay the cost of certain repairs of capital improvements or equipment.  The repairs must be of a type not recurring annually or a shorter intervals.

Workers’ Compensation (WC)

GML §6-j

For payment of compensation benefits, medical, hospital or other expenses authorized by Article 2 of the WC law and for payment of expenses of administering a self-insurance program. Must qualify as a self-insurer under Section 50[4] of the WC law. 

Mandatory

GML §6-l

To generally restrict the use of 1) the proceeds of the cash sale of a capital improvement, and 2) state and federal aid received on account of a capital improvement to the retirement of outstanding obligations issued to finance such improvement. 

Tax Reduction (sale of real property)

ED §1604[36],

1709[37]

To establish a reserve for reducing taxes.

Capital Purposes

ED §3651[1]

To pay the cost of any object or purpose for which bonds may be issued by, or for the objects or purposes of, a school district.

Tax Certiorari (note 1)

ED §3651[1a]

To pay judgments and claims in tax certiorari proceedings in accordance with article seven of the Real Property Tax Law.

Special Account

LFL*** §165.00

For the deposit and use of proceeds from the sale of bonds, bond anticipation notes, capital notes, urban renewal notes or budget notes.

School Districts and BOCES

Unemployment Insurance Payment

GML §6-m

To reimburse the State unemployment Insurance Fund for payments made to claimants where the School District or BOCES has elected to use the benefit reimbursement method, in lieu of contributions under article 18 of the Labor Law. 

Insurance (2)

GML §6-n

To insure certain uninsured losses, claims, actions or judgments for which the local government is authorized or required to purchase or maintain insurance, with a number of exceptions. 

Employee Benefit Accrued Liability (2)

GML §6-p

To pay for any accrued ‘employee benefit’ due an employee on termination of the employee’s service. 

Retirement Contribution (2)

GML §6-r

To reserve funds for future payments of retirement contributions to the ‘New York State and Local Retirement System’ and the ‘New York State Teacher’s Retirement System’.

Property Loss & Liability Claims

ED** §§1709[8-c], 1950[4][cc]

To establish and maintain a program of reserves to cover property loss and liability claims. (A separate bank account required for BOCES.)

BOCES

Career Education Instructional Equipment

ED §1950[4][ee]

To finance all or part of the cost of the replacement and purchase of advanced technology equipment used in instructional programs conducted by BOCES. (A separate bank account is required.)

City School Districts

Uncollected Taxes

ED §3651[1b]

To cover uncollected real property taxes for a given tax fiscal year (subject to limitations).