We judgmentally selected and reviewed 10 purchases of various goods and services totaling $253,677 and paid in 2015 to assess if the District obtained multiple quotations or requests for proposal (RFPs). We reviewed five purchases contracts ($45,890), three public works contracts ($28,410) and two professional services contracts ($179,377). District officials could not provide evidence that they had obtained quotations or RFPs for eight purchases totaling $194,308. Of the remaining two purchases tested, one was for turnout gear (helmets, gloves, coats and pants costing $22,669) from a State contract vendor and the other purchase (20 pagers costing $6,700) included evidence that District officials obtained two written quotes. By not soliciting competition for goods and services, District officials do not have adequate assurance that they are obtaining services with the most favorable prices.

Based on our limited procedures, the Town has not made sufficient progress implementing corrective action. Of the 10 audit recommendations, one recommendation was implemented, one recommendation was partially implemented and eight recommendations were not implemented. As a result, residents of the town, outside of the village, continue to bear an inequitable share of the cost of providing Town services.

District officials need to improve the purchasing process to ensure that competitive methods are used when procuring goods and services. Although the Board adopted a purchasing policy that indicated it should set dollar limits for obtaining written and verbal quotes for purchases that fall below competitive bidding thresholds, the policy did not establish dollar limits, specify the number or type of quotes to be obtained or the required documentation to be maintained. As a result, we found no indication that District officials solicited competition for 20 purchases totaling approximately $257,100. Therefore, there is no assurance that these purchases were made in the most prudent and economical manner. While we did not find any prohibited conflicts of interest, District officials did not follow the Board's policy for soliciting and obtaining disclosures of interests from officers and employees to avoid any potential conflicts.

The Board does not have a policy on cash receipts. While District officials presented us with a copy of written procedures on handling cash receipts and deposits, the procedures do not address issuing triplicate receipts, recording the date and form of payment, or conducting an independent review of amounts collected and deposited. In addition, the written procedures have not been distributed to the finance clerks or athletic office secretary. As a result, they have developed their own procedures and each one accounts for the cash receipts differently. While the athletic office secretary did not issue receipts, cash from driver education fees was generally accurately recorded and deposited intact and in a timely manner. Although none of the finance clerks issue triplicate receipts, three finance clerks do issue receipts, but only for cash payments. Four of the finance clerks had no record of the date money was collected or the form of payment. As a result, District officials lack assurance that cash receipts were deposited intact and in a timely manner.

Based on the results of our review, we found that the significant revenue and expenditure projections in the proposed budget appear reasonable. However, City officials should assess what is a reasonable amount of fund balance for each fund considering various factors such as the timing of receipts and disbursements and the volatility of revenues and expenditures. In addition, the Common Council should consider increasing the contingency appropriations in the adopted budget. The Common Council should also include a tax overlay in the adopted budget. Finally, the Common Council will have to adopt the proposed local law to override the tax levy limit in 2017.

The District needs to improve its claims auditing process to help ensure that all claims are adequately documented, for appropriate District purposes and properly audited and approved before payment. The Board appointed a claims auditor to assume its powers and duties to examine and approve or disapprove claims. To facilitate the claims auditing process, the Board adopted a claims auditor policy outlining the claims auditor's responsibilities. The Board-appointed individual who served as claims auditor resigned effective November 18, 2015. District officials then contracted with BOCES through a cooperative service agreement to audit District claims, and a BOCES employee has audited all District claims including those for BOCES-provided services since then. The District is one of BOCES' component districts and made material and significant contract payments to BOCES. Therefore, this arrangement was inappropriate because the BOCES claims auditor approved claims submitted by her employer, which compromised the auditor's objectivity and independence.

BOCES officials did not establish formal fixed asset policies and procedures that provide clear guidance for asset recording and disposal. As a result, BOCES staff did not properly record and account for fixed assets. Not all assets were recorded on the Fixed Assets list, and assets were not always in the locations indicated. We also found that not all assets were tagged and that some assets were disposed of without Board approval. As a result, BOCES officials do not have adequate assurance that all BOCES property is safeguarded.

District officials generally ensured that the cash receipts process for ECA funds was administered in accordance with District guidelines and the Regulations. However, the school store faculty advisor routinely retained a portion of cash collected for anticipated club expenditures and deposits submitted to the central treasurer typically lacked detailed documentation of money collected. During 2015-16 the school store deposits were not made in a timely manner, with the time between collection and deposit dates ranging from 15 to 91 days.

The Board and District officials overestimated appropriations in the adopted budgets and allowed unrestricted fund balance to exceed the statutory limit. As of June 30, 2015, unrestricted fund balance totaled $3.8 million and was 9 percent of 2015-16 budgeted appropriations, which exceeded the limit by 5 percentage points. This trend is projected to continue through 2016-17.

Based on the results of our review, we found the significant revenue and expenditure projections to be reasonable. However, the proposed budget provides only minimal funding for capital expenditures, and the City has not fully funded its 2017 capital plan. City officials should also be cognizant of the potential financial impact of the settlement of any of the City's six expired collective bargaining agreements in 2017. Furthermore, we found that the City's proposed real property tax levy is not in compliance with its tax levy limit and the Council has not adopted a local law to override the limit. Should the City not take action to adopt a tax cap override or make cuts to the budget, it will be left with an unbalanced 2017 budget that will not have sufficient revenues to fund operations. If this occurs, the City risks triggering a reimposition of the emergency period under the City of Troy Supervisory Board Act.

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.

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.