New York State
Comptroller Audit Report
Port Jervis disagrees with
fund balance analysis
POSTED: JUNE 10, 2010
The Office of the New York State
Comptroller has released the findings of its Port Jervis School
District audit. The report, which covers the period of 2008 to
2009, was completed in May 2010 as part of the Comptroller’s
ongoing effort to audit all public school districts. As
expected, the extensive review of Port Jervis finances did not
uncover any instances of fraud or the misuse or misappropriation
of funds.
The audit evaluated the effectiveness of the District’s fiscal
controls and management. It scrutinized all areas of finance to
include purchasing, banking and investments, cash receipts, and
travel expenses. The report does not cite a single case of fraud
or abuse, nor does it criticize the overall financial health of
the district, which other internal and external district
auditors have all described as excellent.
Of all the areas scrutinized by the auditor, the Comptroller’s
Office limited the scope of the report to two selected areas:
payroll and fund balance. While a test of numerous payroll
transactions did not identify any discrepancies or
improprieties, the Comptroller recommended the district avoid
potential errors by segregating its payroll duties. At the time
of the audit, all payroll transactions in the small business
office were handled by one employee. To comply with the
recommendation, the district trained another employee to handle
certain payroll duties and purchased new accounting software
that allows better segregation of functions among employees.
The audit report also recommends that Port Jervis develop a plan
to use surplus fund balance. Because the report is plagued with
misleading statements and errors in basic accounting practices,
Port Jervis officials do not agree with the auditor’s analysis
of the district’s fund balance. In its official response to the
State Comptroller’s Office, signed by both Superintendent John
Xanthis and Board of Education President William Onofry, the
District questioned misleading data and errors in the report’s
fund balance chart. District officials also expressed concern
over the fact that the accounting errors “were not corrected
even when brought to the attention of the auditor.”
This has lead to what Port Jervis officials are categorizing as
“very misleading” information in the report’s fund balance
chart. Notably, their written response points out the fact that,
while the district fund balance for 2006-07 was slightly above
the recommended allowance, the chart gives the impression that
the amount was excessive.
During the period reviewed by the audit, the District’s average
year-end savings amount was approximately $1.3 million. “This
savings, obtained through prudent budget management, underscores
the fact that the District does not look to spend every dollar
budgeted just because it is authorized to do so. Instead, as is
done routinely in the private sector, we save these dollars for
specific purposes or use the revenue to help keep down taxes,”
said Xanthis.
Port Jervis has used its fund balance judiciously in recent
years to maintain facilities and to reduce debt without
compromising student programs or drastically increasing taxes.
Xanthis stressed, “Our prudent budget practices are benefiting
our community at a time when the state is going through a fiscal
crisis.” Unlike many New York school districts that were forced
to make extensive program and staff cuts, Port Jervis is not
going to have to cut any jobs or educational programs. “Since we
had set aside money in the reserve fund, we were able to keep
taxes down by applying $750,000 from the fund toward the tax
levy for the 2010-11 school year.”
Listed below are the ways the district has used or proposed to
use allocations from its fund balance to benefit District
taxpayers. Many of these were implemented prior to release of
the audit report:
• Reduce tax levy:
Allocations from the fund balance were used in 2010-11 and
2009-10 to reduce district property taxes.
• Financing One-Time Expenses:
2010-11: Purchasing a
new modular for the special education and student
registration departments.
2009-10: Demolish
condemned bus garage and construct new building
and grounds building.
• Paying off Debt:
2008-09: Applied $1
million to reduce borrowing on $14.6 million.
(Approved by voters December 2006.)
2009-10:
Applied $2 million to reduce borrowing on $14.6 million
referendum.
(Approved by voters February 2010.)
• Increasing
necessary and properly-authorized reserves:
In 2008 and 2009, the District proposed a referendum to
establish a special
reserve account to help reduce the cost to build a future
school building.
The referendum was defeated both times.
Link to New York State Comptroller Audit
Report
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