Town officials are not ensuring that transfer station revenues are sufficient to cover the costs of operating the transfer station. Users of the station must obtain a sticker from the Town Clerk at an annual cost of $5 in 2015 and $10 in 2016. Additionally, the Town of Tompkins pays the Town $2,200 annually for its residents to use the transfer station. However, in 2015, the Town collected total revenues of $11,600, including scrap sales of $5,300, sticker sales of $4,100 and the $2,200 payment from the Town of Tompkins, but expended $57,100 for transfer station operations. As a result, Town residents subsidized transfer station operations. To make the transfer station self-sufficient, the price of transfer stickers would have to increase to at least $62 per year to generate $49,600 of sticker revenue (with approximately 800 users), which when added to the scrap sales of $5,300 and $2,200 from the Town of Tompkins would cover the 2015 operating costs. Other alternatives would be to increase the fee for commercial users by a greater amount in order to keep individual sticker fees less than $62. Changing the sticker fees would shift the cost of the transfer station from Town taxpayers to the transfer station users and help the transfer station be self-sufficient.

The Board should improve its oversight of Town financial operations. Although required to be reviewed annually, the Board has not updated its procurement policy in almost 20 years and did not ensure that Town officials and employees followed it. Further, the claims audit process was inadequate, and the Board did not ensure an annual audit was completed for the departments that received and/or disbursed funds.

During our audit period, the Authority had cash receipts of approximately $1,036,000. However, the Board and Authority officials have not adopted policies and procedures to ensure that cash receipt, cash disbursement and bank reconciliations duties are segregated. As a result, the administrative assistant bills, receives and records cash receipts and reconciles bank accounts. The assistant also prepares the monthly financial report to the Board. In addition, the Board has not established compensating controls such as reviews of the administrative assistant's work. We traced rent rolls to receipts for one month; compared three months of receipts to amounts recorded in the Authority's rent receipts software, deposit slips and bank statements; and reviewed bank reconciliations for three months. We found that billings, receipts and bank reconciliations were properly performed.

District officials have not adopted realistic budgets or properly managed fund balance. District officials have maintained unrestricted fund balance slightly above the statutory limit for the past three years and have appropriated approximately $900,000 of fund balance annually to help finance budgeted appropriations. However, the appropriated fund balance was not needed because District officials overestimated appropriations each year by an average of $2.3 million (6 percent). With unused appropriated fund balance added back, unrestricted fund balance exceeded the statutory limit of 4 percent by approximately $1.1 million or 3 percentage points each year. Based on the 2015-16 and 2016-17 adopted budgets, these budgeting practices have continued. Over the last three years, District officials increased the tax levy by 2 percent each year – a total of $624,000 – and levied taxes for expenditures that could have been paid for with reserve funds. As a result, District officials missed opportunities to reduce taxes and return excess funds to the taxpayers.

The Board implemented adequate internal controls to ensure that financial activity was properly recorded and reported and that Program moneys were safeguarded. The Town implemented procedures for collection, recording, depositing and disbursing Program funds that appropriately segregate these duties. We commend Program officials for establishing appropriate controls over the Program's financial activity.

The Board, Superintendent and Executive Director generally managed District finances properly. However, appropriations in the District's adopted budgets from 2012-13 through 2015-16 were overestimated by approximately $12.4 million (4 percent). While the Board and District officials generally maintained unrestricted fund balance levels in accordance with the statutory limit, we found that they appropriated fund balance in the adopted budget each year that was not actually used as budgeted because the District realized operating surpluses. District officials also charged expenditures to certain reserves but then used a portion of the surpluses to replenish these reserves rather than funding them through the budget, which diminished transparency to District residents. Finally, the employee benefit accrued liability reserve, the liability reserve and the unemployment insurance reserve, with balances totaling $5.5 million, are overfunded by as much as $2.7 million.

We reviewed the District's general fund budgets for the 2012-13 through 2014-15 fiscal years and found that actual expenditures were less than the budgeted appropriations for each fiscal year. The Board overestimated expenditures by an average of $4.4 million per year from 2012-13 through 2014-15. In addition, the Board adopted budgets that included about $3.8 million in appropriated fund balance to finance District operations each year. However, the amounts appropriated were not used because the Board overestimated expenditures. Because the District's budgets resulted in operating surpluses in all three years reviewed, the District did not use any of the fund balance appropriated to finance operations. Instead, fund balance increased by the amount of the operating surplus. Over the past three fiscal years, the District's reported unrestricted fund balance at year- end exceeded the statutory limit. In addition, because the District did not need the amount that the Board appropriated in the budgets to finance operations, the District is in essence retaining more than the reported 7 to 8 percent by designating an unneeded portion of fund balance to support the ensuing year's budget. When unused appropriated fund balance is added back to the unrestricted fund balance at year-end, the District's recalculated unrestricted fund balance was between 17.8 and 19.7 percent of the ensuing year's budget.

Facility officials achieved a net total of $211,000 in energy cost savings during the audit period. From 2013 through 2015, the Facility produced 119.6 million cubic feet of biogas. The Facility used 87 percent of this amount to generate 4.1 million kWh of electricity and 53,000 therms of heat energy instead of purchasing these resources from the local energy supplier. The Facility also flared 15.6 million cubic feet, or 13 percent of the biogas it produced, in a controlled manner when the production of biogas exceeded the Facility's demands or storage capacity. The current flaring system configuration requires a constant flare of biogas. Facility officials were aware of this inefficiency and plan to upgrade the flaring system.

The Board needs to improve its oversight of the Company's cash disbursement process to ensure that cash disbursements are approved and for valid Company purposes. The Board did not review any disbursements before the Treasurer disbursed Company funds. Disbursements in the form of check, debit card and cash withdrawals were made without the prior approval by a majority of the Company's voting members who were present at a meeting, as required by the constitution.

The Board did not adopt realistic, structurally balanced general fund budgets. The Board appropriated a total of $4.8 million of fund balance and reserve funds during the 2012-13 through 2014-15 fiscal years. However, the Board overestimated revenues by $3.3 million (5 percent), resulting in operating deficits that were larger than planned and declining general fund and reserve fund balances. General fund balance declined 84 percent, from $8.4 million at the beginning of fiscal year 2012-13 to $1.4 million at the end of fiscal year 2014-15. Combined reserve fund balances have declined by 58 percent, from $3.5 million to $1.5 million during the same period. The rapid deterioration of the District's fund balance and reserves has caused District officials to disburse $2 million from a Rensselaer City School District Corporation account to the District to fund operations. District officials also transferred $1.3 million from two reserve funds to the general fund without appropriate support. Furthermore, the Board does not receive adequate or sufficient information to effectively perform its fiscal oversight responsibilities. Finally, the Board has not developed comprehensive multiyear financial and capital plans to assist in addressing future needs.

BOCES officials have entered into three collective bargaining agreements (CBAs) and one individual employment contract and have two handbooks addressing terms and benefits for employees. These contracts and handbooks provide for eligible employees to receive payment or retirement service credit for earned but unused leave time upon leaving BOCES employment. We found that BOCES officials made accurate employee separation payments and granted service credit as authorized by the CBAs, employment contract or handbook. We commend BOCES officials for establishing an effective employee separation payment process. Establishing and adhering to an effective process decreases the risk that incorrectly calculated or unauthorized payments or credits will be made.

While the Board developed an adequate policy to ensure claims were accurate, valid, properly supported and for legitimate District purposes, it did not ensure the claims auditor received the necessary training to carry out the policy. Our review of 50 claims showed that 31 totaling $220,750 did not contain the required quotes, bids or contracts. Without this documentation, the claims auditor could not conduct a thorough audit of claims. Also, 41 of the claims totaling $277,418 had no receiving documents or packing slips attached to the voucher packages. Our review of 28 open purchase orders (OPOs) totaling $91,745 showed that 10 were overspent by $49,001. Although the claims auditor verified the vouchers or invoices against the purchase orders, the claims auditor did not verify that vouchers or invoices agreed with quotes, bids or contracts. The claims auditor also did not verify that receiving documents or packing slips were attached to the claim packages or that sufficient funds were available on the OPOs when approving claims. In addition, the facilities department does not maintain complete and accurate records of materials and supplies. The facilities department has consumable inventories on hand such as lumber, paint and electrical and plumbing supplies. Although District officials projected they would spend approximately $480,000 on materials and supplies for 2015-16, they have not adopted procedures that establish the duties, records and control procedures for safeguarding inventories and do not have a reconciliation process to verify what was purchased, used for work orders and on hand.

Based on the results of our review, we found that the significant revenue and expenditure projections in the preliminary budget are reasonable. The Town's proposed budget complies with the property tax levy limit.

We judgmentally selected and reviewed 38 paid claims totaling $1.1 million to determine whether BOCES complied with its adopted purchasing policy. We found that BOCES generally procured goods and services in accordance with its purchasing policy. However, the policy does not clearly describe if there are any conditions or circumstances when soliciting proposals or quotes for professional services is required. Furthermore, the bid specifications for equipment costing $170,470 may have been too restrictive to foster competition.

During our audit period, the District made 19,010 claim payments totaling $197 million. We found that District officials established adequate controls to ensure claims are audited in a timely manner, properly authorized and for legitimate purposes. However, in some instances, purchase orders are not issued prior to ordering goods or services.

We reviewed all the duplicate receipts issued for collections during our audit period to determine if they were recorded in the computerized accounting system and moneys were deposited into the Justice's bank accounts. We reviewed bank reconciliations and accountabilities for each Justice for the audit period and found that the balances in the Justices' accounting records agreed to the amount on deposit in the Justices' bank accounts. In addition, our review of 50 case files (25 cases for each Justice) disclosed that the amounts reported as collected in these files agreed with the duplicate receipts, monthly accountability reports and monthly reports to the Justice Court Fund. Except for minor exceptions which were discussed with Court officials, we found that Court collections were accurately accounted for and deposited into the Justice's bank accounts. We commend the Justices for establishing effective internal controls over Court operations.

Although the District's policy indicates that it has a written online banking agreement with its bank, District officials told us they do not have an agreement with the bank. They also did not adequately segregate online banking duties and did not dedicate a separate computer for online transactions to limit access to online bank accounts. Furthermore, both the Treasurer and Business Manager perform online banking transactions, but neither has received Internet security awareness training.

The Board did not adequately oversee the Village's financial operations by developing clear and adequate policies and procedures, sufficiently segregating financial duties or implementing compensating controls to mitigate the risks. As a result of this weakened control environment, both the Clerk-Treasurer and the Mayor were able to abuse their fiduciary duties. The Clerk-Treasurer was paid for unsubstantiated hours that were often logged while at home on nights and weekends. In addition, she manipulated her leave accrual balances. Further, the Board did not adequately audit claims to ensure that they were for Village purposes. As a result, the Mayor used the Village credit card to make personal purchases of cigarettes, soda and food and submitted mileage and purchase reimbursement claims that were unsupported, false, inaccurate and unfounded, without being detected. The Board also abdicated their fiduciary responsibility by allowing the Clerk-Treasurer to pay claims prior to their audit and did not perform the required annual audit.

The City of Glen Cove, located in Nassau County, issued debt totaling $12.8 million to liquidate various accumulated fund deficits for the fiscal year ending December 31, 2006. New York State Local Finance Law requires all local governments that have been authorized to issue obligations to fund operating deficits to submit their proposed budget for the next fiscal year to the State Comptroller for review while the deficit obligations are outstanding. City officials are projecting operating surpluses for the 2016 fiscal year totaling $990,296 in the general fund and an operating deficit totaling $54,816 in the water fund. The City projects that, as of December 31, 2016, it will have a combined unassigned fund deficit totaling more than $4 million in the general, water, and golf and recreation funds. The City included $3.9 million in revenue in the 2017 proposed budget from the sale of waterfront property and City officials were unable to provide any definitive documentation that the sale will take place during the upcoming year. The City has budgeted $1.9 million for building permit revenues, an increase of $520,536 over the 2016 estimate. This increase is associated with building permit applications that are part of the waterfront property development which may not occur in 2017. The 2017 proposed budget contains no appropriation for the payment of tax certiorari refunds, which have averaged $923,000 over the last five years. City officials told us they intend to use debt to finance tax certiorari settlements. The City's proposed budget complies with the tax levy limit.

We reviewed payroll payments made to 18 employees with combined total gross pay of $80,888 during May 2016 to determine whether salaries and wages were accurately paid. Except for minor deficiencies, which we discussed with District officials, the District's procedures for payroll processing (by the payroll clerk) and payroll review and certification (by the Superintendent) were adequate to ensure that the employees we reviewed were accurately paid at Board-authorized rates. We commend District officials for establishing adequate payroll procedures to ensure that employee payments are accurate.