“Excessive amounts of money can sit unused or in unauthorized reserve funds because of flawed budget practices,” DiNapoli said. “Moving forward, BOCES officials need to be more accurate and more transparent with their budgeting.”
BOCES funds are derived primarily from component and participating school districts. BOCES officials are required to report to each district the cost allocated to that district in the past year’s budget, the actual expenditures associated with providing shared services and any operating surplus that resulted. New York state education law requires BOCES to credit excess money to each district every fiscal year.
DiNapoli’s auditors discovered officials did not comply with these requirements at both the Cattaraugus-Allegany-Erie-Wyoming and Orleans/Niagara BOCES.
From fiscal years 2012-13 through 2014-15, auditors found that BOCES officials consistently overestimated appropriations by an average of $4.4 million (or 6.6 percent) each year. As a result of these practices, the BOCES has generated annual operating surpluses averaging $4.7 million, totaling approximately $14 million during this time frame.
Although BOCES has refunded more than $10 million of its surpluses to its component districts, BOCES has also used approximately $4 million (29 percent) to increase its reserves without informing the public and the districts.
BOCES officials have also set aside nearly $13 million in a trust to pay for “other post-employment benefits” despite lacking the legal authority to do so. The Comptroller highlighted the same issue in a 2009 audit and recommended that any funds contained in this trust be returned to the general fund and disbursed back to districts.
In 2014-15, officials significantly overestimated employee salaries ($824,000, or 5 percent), retirement contributions ($615,000, or 14 percent) and health insurance costs ($710,000, or 11 percent).
BOCES officials also have improperly restricted more than $5 million of surplus funds and had approximately $2.4 million in reserves for no specific purpose.
A 2009 audit of Orleans/Niagara BOCES by the Comptroller’s office revealed similar findings.
DiNapoli made a series of recommendations to each BOCES, including:
- Develop reasonable budget appropriation estimates;
- Apportion surplus funds back to component school districts;
- Ensure funding of reserves is transparent to the districts and the public by including appropriations for the amounts the board intends to transfer in the proposed budget; and
- Determine if the amounts in reserve are necessary and reasonable.
BOCES officials disputed some of the audit findings. Their full response is included in the final audit report, which can be read by visiting: