New York State Comptroller Thomas DiNapoli released an audit of the Syracuse School District Thursday that criticizes its handling of finances. DiNapoli pointed out that his auditors have been examining districts throughout the state and applauded Syracuse school leaders for their cooperation and and commitment to corrective action. "That really should be the model of how this audit process should work in every district." DiNapoli said.
But the audit found a number of serious problems. It criticized the district for putting $107,000 in "unauthorized" school bank accounts. It uncovered $19,500 in improper payments to employees. The audit said said "poor fiscal monitoring" led to $1.2 million in financial records errors. It found the district did not comply with purchasing policies in awarding ten contracts. Auditors also said the district reported part time employees as full time to the state and local retirement system.
"We found some weaknesses that we very clearly identified and the district has acknowledged those weaknesses,not disputed them and agreed to address them." DiNapoli told reporters attending a news conference at the State Office Building in Syracuse.
Syracuse School Superintendent Dan Lowengard said, "We're taking this very serious and we're looking toward the future as to how we account for every single penny."
Lowengard says he intends to issue a corrective action plan within 30 days, but he says the district has already hired more staff and restructured the business department. The superintendent said the district is modernizing the accounting system with new software and has done away with unauthorized school bank accounts.
Syracuse Mayor Matt Driscoll issued a statement calling for a consolidation of the school district's financial management system with City Hall's. "We simply can not afford to continue to leave revenue owed to us on the table," the mayor said in an apparent reference to the $1.2 million in financial record errors.
Lowengard says no money was left on the table. "There wasn't a million dollars that was lost someplace. There was an accounting process that we needed to clean up."
Lowengard says the taxpayers did not lose any money and the district "did not get any more money than what it was entitled to."
The audit took a hard look at "extra classroom activity" or ECA funds which became the subject of an Action News investigation at Fowler High School a year ago. We obtained a copy of an internal audit which claimed then Fowler Principal Laura Viera-Suarez allegedly mishandled ECA accounts which helps pay for student activities. Viera-Suarez was moved to another position at the central office as the school board investigated the use of such accounts at all schools.
The comptroller's audit also looked into the allegations. When asked if the auditors found anything that should be brought to the attention of law enforcement, DiNapoli replied, "There were no referrals to law enforcement as part of this audit."
Superintendent Lowengard says the findings of the internal audit were turned over to the Onondaga County District Attorney. "We've heard nothing from that." he added.
A spokesman for the District Attorney's office said they do not comment on investigations.
The following is a news release issued by the Comptroller's office detailing the findings of the audit:
Syracuse City School District took several actions to increase oversight of its financial operations after auditors from the State Comptroller TMs office found poor fiscal monitoring led to: $1.24 million in financial records errors; $19,500 in improper payments to employees; and $107,000 being placed in unauthorized school bank accounts, according to an audit released today by State Comptroller Thomas P. DiNapoli. Now more than ever, we have to protect taxpayer dollars, DiNapoli said. In the Syracuse City School District, that protection wasn TMt very strong. But the district stepped up in response to our audit and has taken immediate action. My office TMs audits can help school districts serve taxpayers and students better. District officials embraced this concept and got started on improvements right away. This is the kind of response we want from our audits. Taxpayers shouldn TMt have to worry how their tax dollars are being spent. School district officials in Syracuse have taken steps to eliminate that worry. The audit found the district TMs recordkeeping for its accounts receivable, or money owed to the district, was so poor that district officials had no way of ensuring that all the money due to the district was actually received. Auditors determined the accounts receivable were overstated by $1.24 million, which represented 40 percent of outstanding accounts. In response to the audit TMs findings, the district implemented a centralized accounts receivable system and started management review of accounts receivable reports. Auditors also discovered that errors routinely occur in the district TMs payroll process and go undetected. As a result, the district improperly paid $19,500 in compensation and benefits to employees. Some of these payments were miscalculated, lacked board approval or did not have adequate documentation. In addition, the district allowed a principal to roll over 50 sick days from a previous job, which could result in $10,625 in extra cash payments to the principal. The district has recouped much of the overpayments and created a payroll supervisor position to provide greater oversight of the payroll process.
DiNapoli TMs audit also found the district had weak controls to monitor its individual school bank accounts and extra-classroom activity accounts (ECA), which recorded more than $1.5 million in activity in 2006-07. Each individual school maintained a school account for funds the schools raised through various fundraising activities. The district did not have the authority to create these accounts, which held approximately $107,000. In addition, the ECA and school accounts paid $27,100 without proper documentation to support the payments. The district has hired a full-time employee to better monitor the ECA accounts. DiNapoli TMs audit also found the district:
- Did not comply with the City of Syracuse or the district TMs purchasing policies when it awarded 10 contracts totaling $1.25 million;
- Did not properly segregate payroll and cash handling duties or ensure that there were proper checks and balances in place to reduce the risk for errors, abuse or misuse of funds; and
- Incorrectly reported part-time employees as full-time employees to the New York State and Local Retirement System.
DiNapoli TMs office recommends that district officials:
- Have someone independent of accounts receivable cash handling and recordkeeping reconcile the account;
- Use software for accounts receivable that allows for better and more accurate recordkeeping;
- Require supervisory approval for adjustments to accounts receivable records and review change reports;
- Develop enforcement procedures for outstanding billed invoices;
- Segregate payroll duties and cash handling duties to reduce the risk of errors or irregularities;
- Discontinue using school accounts and ensure that payments from ECA accounts have proper documentation; and
- Ensure that district employees involved in making purchases for the district comply with procurement policies.
The district generally agreed with the audit TMs findings and has begun to initiate corrective action in several areas. In order to protect the public TMs money and ensure transparency, this was an important process, said Daniel G. Lowengard Superintendent of Schools at Syracuse City School District. Comptroller DiNapoli and his team have provided us with a road map to increase our accountability and efficiency. Much work has already been done but there is still more to do. We are moving forward in the right direction. The district TMs full response is included in the audit. To view the audit, visit: http://www.osc.state.ny.us/localgov/audits/schools/2009/syracuse.pdf School District Accountability In order to improve accountability of the state TMs schools, DiNapoli TMs office will audit all of New York TMs school districts and Boards of Cooperative Educational Services by 2010. The State Comptroller TMs office has completed 685 school audits and approximately 45 school audits are currently underway.