After an audit by the office of the New York State Comptroller Thomas P. DiNapoli spotlighted three areas for corrective action in the Oysterponds School District, the superintendent and board of education have spoken out to set the story straight on what they say happened — and how the issues have been remedied.
The report, which covered the time period from July 1, 2012 to October 31, 2013, said that the Oysterponds had issues in the area of “financial management, check signing and information technology.”
According to recommendations in DiNapoli’s report, “the board needs to improve its oversight and management of the district’s budget. Over the last four fiscal years, the district’s conservative budgeting practices resulted in operating surpluses that totaled approximately $164,000. To reduce fund balance, the board appropriated unexpended surplus funds each year, for a four-year total of nearly $1.3 million, to help finance the ensuing year’s operation. However, because of the district’s surpluses, approximately $1 million of the fund balance appropriations over the four years went unused. As a result, the district accumulated unexpended surplus funds equivalent to 11 percent of the ensuing years’ budgets, or nearly three times the amount allowed by law. Further, we found that the amount retained in the District’s retirement contribution reserve is excessive and the district made retirement payments out of the general fund rather than the reserve fund. These ondoing budgeting practices resulted in taxpayers paying more than necessary to sustain District operations.”
In addition, DiNapoli said the board “improperly appointed its president, in place of the treasurer, as the sole signatory on district checks under $5,000, with its vice president as co-signor for all district checks over $5,000. . . By usurping the treasurer’s disbursement functions, the board has diminished an important segregation of functions and compromised the checks and balances that are designed to help ensure that district moneys are properly expended.”
Finally, a third point highlighted by the comptroller said the board had not yet developed and adopted policies, including a a disaster recovery plan and a breach notification policy, to ensure the district’s electronic data was adequately safeguarded. “As a result, the district’s IT system and electronic data are at risk of loss or damage. Finally, the district may not be prepared to fulfill its legal obligation to notify affected individuals in the event that private information is compromised,” the report stated.
On Monday, Oysterponds Superintendent Dick Malone said he believed the audit had “gone very well. The items that they picked up were already addressed.”
Policies regarding the breach concern have been adopted, and necessary changes had been made to the policy regarding signatures on checks.
“In all fairness, these practices that were established had been recommended to the board by local auditors at the time. The board is not fully responsible because they were acting on the auditors’ recommendations for checks and balances,” he said.
In addition, Malone said this year’s budget proposed a full refurbishing and updating of the district’s technology infrastructure. Safety and security measures have been built into the system and were adopted. “Now, there is a policy in place, so if there was a breach in any security, we know exactly how to handle it,” Malone said.
Board of Education president Dorothy-Dean Thomas agreed that the board was “very, very pleased with the audit.”
She sought to explain what had happened with $1.3 million that some believe had been put back into the operating budget. “That is not a correct characterization,” she said.
Instead, she said six or seven years ago, a “miscommunication” led to an incorrect reporting of how many students there were in the secondary school, which sparked a “huge budget increase,” well before the two percent tax cap was imposed.
“I came onboard in 2010 and they were already dealing with this huge surplus,” Thomas said.
In addition, she said, the district is designated as a community shelter and has been replacing windows in an ongoing project; the district has also embarked upon a major technology upgrade.
“We started giving back the excess money to the community,” Thomas said, with $500,000 given back one year and $400,000 the next.
With long-range planning critical under the two percent tax cap, Thomas said, with any surplus that went beyond the four percent allowed by law, the goal would be to create a capital reserve fund, to be used in lieu of bonding for upcoming capital improvements.
The community, would still have “complete control” over how those funds were spent, and would decide what projects the district could decide to move forward with, she said.
“It’s not like we went to Tahoe, or bought extra paper clips,” Thomas said.
As for the check signing issue, Thomas said, “We’re a very small school district, and we were trying to create checks and balances with a limited number of staff. The auditors we had at the time recommended we do what we did.”
The situation was resolved with via resolution, she said. “That was a quick correction.”
Finally, Thomas assured the technology upgrade addressed the security issue outlined in the audit.
