Audit: Tupper Lake schools’ financial reports are late

District is contracting with BOCES to fix this

TUPPER LAKE — A state audit of the Tupper Lake Central School District’s financial office found its recordkeeping and reporting practices often resulted in late or inaccurate reports. In light of the audit, the district is already taking steps to remedy this.

The June 25 audit by the state Comptroller’s Office says the district did not keep complete, accurate and timely records of its finances, which the state says led to ineffective management of its finances and capital projects, and to the school board receiving inaccurate reports.

The district’s main solution is to share business office employees with the Franklin-Essex-Hamilton Board of Cooperative Educational Services.

“Without reliable accounting records the board and other district officials’ ability to manage the district’s financial condition and make sound financial decisions is limited,” the audit says.

The audit suggests the district correct its recordkeeping practices to be more timely and coordinated.

“We don’t disagree with any of what they’re recommending,” FEH BOCES Assistant Superintendent for District Finance and Operations Dan Bower said. Bower used to be TLCSD’s Business Administrator, but was traded to BOCES as part of the district’s corrective action plan.

The comptroller’s office tries to audit every school district once every five years, and it was Tupper Lake’s time.

Bower said the audit’s findings were not surprising to him.

“It’s actually, I say, welcome news,” Bower said. “Nobody wants criticism to be done of your work, but we all have room to improve on things.”

He said these audits are meant to improve financial practices. He said it showed everything was done, just not on time.

The most common finding in the audit was that reports were not finished in a timely manner.

“Not because anybody here wasn’t doing their job,” Bower said. “We just didn’t have enough people, or people in the right spot.”

Bower said the district has always spent low on its financial department to save money. This led to financial reports going overdue, and he would catch up on accounting reports over the summers.

The audit also said the school board is not overseeing the treasurer’s duties as it should. With less oversight, it is more likely an error might occur or be left undetected, the comptroller’s office said. It also said this results in payments for state aid to the district coming in late.

The audit says district officials did not provide support for 12 of 15 of its balance sheet accounts reviewed. Bower said this is a “transparency issue” and that the district is working to make the completion of these sheets a monthly task, so they can be reviewed by the board.

Capital project leftovers

The audit said the district does not always close out accounts on capital projects when the work is done so that the unexpended money can be used to pay off debts.

“By not closing out completed projects and distributing unexpended debt proceeds in a timely manner, district officials withheld $359,427 in funds that should have been used for related debt service payments, which could have reduced the district’s tax levies,” the report states.

Bower stands by the decision to not use this money to reduce tax levies, saying it protects the taxpayer in the long run.

“That’s a strategy. There’s nothing that we’re trying to hide in doing that,” he said. “We are more susceptible to (financial) risk.”

The district has always met or been under its allowable tax cap increase in recent years, so he said there’s been no need to lower the levy.

“We could give it all back immediately. That would feel good right away,” Bower said.

“But that money would have to come out of one pocket to go to the other pocket,” TLCSD Superintendent Russ Bartlett said, finishing the thought.

Bower said instead of spending this money to lower the levy a lot in one year, it can be saved to lower the levy over future budgets.

He called this a “stabilization fund.”

He said part of the district’s plan is to set up a debt service fund.

He anticipates needing this in upcoming years because he believes state aid for schools will come up short again. State aid for schools was set to be cut this year, but federal COVID-related aid helped fill the hole.

The district engaged in 10 capital projects from 2014 to 2020. During this time, the projects were not given individual accounting records. Part of the district’s plan is to create individual bank accounts for each new capital project, through which all transactions will be made.

Financial condition

The audit says, “The district’s financial condition could be misrepresented because of inadequate recordkeeping.”

Bower said the reporting lateness likely could have influenced the district’s susceptibility rating. In January, the comptroller’s office found TLCSD was “susceptible to fiscal stress.”

Bower said this is because $500,000 reported as encumbrances should have been recorded as fund balance. He said, had that been reported as fund balances, the district might not have received that susceptible scoring.

Bower said it’s good to be on the at-risk list because small school districts are always susceptible and should be recognized as such.

Implementing the plan

The audit started in 2018, and reviewed documents back to 2014. It found that in the 2019-20 year the district appropriated $19.9 million, had 170 employees and 710 students enrolled.

Bartlett said the district got the preliminary audit report last year and started working on a corrective plan then. Some of its solutions have already been put into place.

The solution seems counter-intuitive, Bartlett said. The district’s financial office is actually getting smaller. But by contracting out these jobs to BOCES, it will be able to get more work done for a reduced rate.

Bartlett said the audit was delayed by the coronavirus pandemic and resignations from the comptroller’s department, but that the delay on the audit allowed the district time to get ahead of the curve on creating and implementing solutions.

There’s a 90-day window for the subject of an audit to respond to the comptroller’s office, but TLCSD had its response ready before the audit was even finalized.

The audit said late reports meant that the district’s independent audits were also delayed.

The district contracts with an independent auditor every year. The district plans to have its paperwork in order by August so it can get an auditor then and have the audit completed by October.

Bower said while he doesn’t necessarily look forward to the next comptroller audit, he thinks it will be beneficial.

“Do people like going for a colonoscopy?” Bower asked. “It don’t think any audit is something to be fearful of. … Next time they do an audit, we don’t want them to find the same stuff.”

Bower also said BOCES is working on setting up a south-end business office for shared services in Saranac Lake.


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