We found that, although FCIDA has a process in place to monitor the businesses' employment goals, as stated in their applications for FCIDA benefits, it does not have a process for effectively holding businesses accountable when they do not meet specific employment goals. Seven businesses receiving FCIDA benefits during our audit period have not met their employment goals, and only one PILOT agreement allows for the recapture (recovery) of benefits that were provided to the business. In addition, FCIDA did not adequately monitor the PILOT payment process. For one project, the business has not made complete PILOT payments in the last four years and as of April 30, 2014 owed the affected taxing jurisdictions approximately $400,000. As a result, taxpayers may not be receiving expected benefits and affected municipalities have not received all the PILOTs to which they are entitled.

COIDA provides loans from revolving loan funds to eligible borrowers to finance a portion of the cost of approved projects. The repayments of principal and interest from companies are used to make loans to future borrowers. While the IDA statute expressly authorizes an IDA to issue its own bonds and notes to provide financial assistance for IDA projects, it has been the State Comptroller's Office (OSC) long standing view that such legislation does not authorize an IDA to establish a revolving loan program using its own funds, including money that would have been otherwise paid to the County as a portion of a PILOT. Nonetheless, COIDA had 90 loans outstanding as of May 31, 2014, totaling nearly $9.6 million, which were financed with COIDA's own funds. In order to receive loans, companies represent that they will retain and/or create a certain number of jobs. COIDA did not design and implement systems to evaluate job data and the overall performance of companies that received loans from the revolving loan programs. We found no formal process to compare current and projected jobs at the time of application, to the reported number of jobs actually created and retained, in order to determine whether the loan program is successfully resulting in job creation and retention.

The Board has not established documented criteria and procedures for selecting projects and subleases. However, the Board has established a Uniform Tax Exemption Policy, but this policy does not include specific criteria for selecting and approving projects. The Board also does not document their approval process or rationale for approved projects or subleases, or prepare a documented cost-benefit analysis or risk assessment during the project approval process. Although the Board has established an application and administrative fee schedule, the amounts collected for administrative fees deviated from this schedule for six of the nine current active projects where information was available for review. As a result, SCIDA charged approximately $50,000 less in fees than their schedule. In addition, they forgave administrative fees after the fact, resulting in approximately $100,000 in additional lost revenue. SCIDA also relies on County officials to negotiate and select subleases, and has not established their own criteria.

SCIDA officials monitored job creation performance by collecting data from businesses on an annual basis, but because it did not include recapture provisions in its PILOT agreements, they were unable to recover economic benefits if companies did not meet their job creation goals. Our review of 10 projects disclosed that one business met its job creation goal, two businesses did not report sufficient information to allow us to determine whether they met their goals and seven businesses did not meet their goals. Additionally, because SCIDA did not monitor PILOT payments, SCIDA was unaware that affected taxing jurisdictions were underpaid $94,341 from 2003 to 2014.

The Board and management did not formally document and adopt procedures for calculations of cost-benefit ratios and the determination of contractual time periods for businesses seeking financial assistance. As a result, evaluation criteria may not be consistently applied, and the basis for approval or rejection of businesses is not clear. Further, none of the open projects' PILOT agreements we reviewed contained a “recapture of benefits” clause holding businesses accountable for delivering promised benefits to the community in exchange for COIDA tax abatements. Therefore, businesses can terminate their agreements without any financial consequences. One business closed its operations after three years on a 10-year PILOT agreement, having made PILOT payments of approximately $99,000 while receiving a net of nearly $605,000 in tax abatements; however, it was not held accountable for reimbursing those funds to the community. In addition, COIDA officials billed one business using a PILOT billing schedule different from the Board-approved schedule, resulting in the under-billing of $246,000 in the 12 years since the PILOT agreement inception. If not corrected, this will increase to a projected $635,000 over the 20-year PILOT period. Finally, COIDA officials did not require periodic reporting of necessary information from businesses or verify the information that was provided, and therefore did not adequately monitor projects to ensure they meet promised goals.

We found that the CCIDA was effective in its efforts to promote, develop and assist in economic development projects in the County. However, we identified some opportunities for the CCIDA to improve controls and accountability to assure the community it is receiving the expected benefits. CCIDA officials do not verify the investment and job information provided when businesses apply for financial assistance. Additionally, CCIDA officials have not established adequate procedures for meaningful cost-benefit analyses. As a result, the Board may not have accurate and meaningful information on which to make its decisions. Further, CCIDA officials do not adequately monitor ongoing project activity. The CCIDA does not obtain annual confirmations from all active projects and does not verify the accuracy of annual reported data obtained. Without assurance that the amounts reported represent actual activity, which are monitored and compared with expected activity, the Board cannot be sure that the community is receiving the expected economic benefits

County officials did not properly oversee the usage and disposal of county vehicles. The Board has adopted a vehicle policy that specifies that each department head is responsible for establishing written procedures for the assignment of county vehicles as well as the records that should be maintained. However, the policy does not cover the disposal of county vehicles. In addition, we found that five of the six departments that we reviewed did not have written procedures for the assignment of vehicles and four did not maintain vehicle logs. These findings were also identified in an audit completed by our Office in 2003 and remain uncorrected. Furthermore, County officials were not adequately monitoring vehicle usage or performing cost-benefit analyses to support the after-hours locations of vehicles or disposal methods used. Lastly, seven of the 19 vehicles that were disposed during our audit period did not have proper Board authorization and 17 were sold or scrapped without determining if another method could have potentially netted more revenues.

Village officials have not taken adequate steps to identify and reduce the significant amount of unaccounted-for water occurring within the Village's system. As a result, unaccounted-for water was 71 percent of water produced. The Board has not established policies for billing and collecting water rents, determining estimated bills, approving and applying adjustments to customers' accounts, or enforcing overdue water bills. Generally, the Clerk-Treasurer properly billed, collected and deposited water rents. However, because the Clerk-Treasurer is able to perform virtually all of her duties with minimal Board oversight, the Village has an increased risk that inappropriate transactions could be initiated and hidden and that errors could occur and remain undetected.

We found that the Board and District officials have not provided adequate oversight of the District's financial operations. The Board could not appropriately monitor the budget because it did not receive budget status reports. Consequently, when expenditures approached budgeted appropriations, the Board did not increase appropriations, as required by New York State Town Law. We found the District routinely overspent their budget from 2011 through 2013. We calculate that the District spent $33,021 (21 percent) more than budgeted in 2013. In order to continue to pay bills during this period, the Board improperly transferred a net total of $40,000 from the District's capital reserve which had not been repaid as of December 31, 2014. The District reported positive operating results for 2014, resulting in a surplus of $22,911 and a cash balance of $30,362. In addition, the Board did not implement appropriate policies and procedures to protect the District's IT assets. The Secretary has full administrative privileges in the financial software. Further, the Board did not provide adequate oversight of the Secretary's work, such as reviewing bank statements, bank reconciliations, and audit logs or conducting an annual audit of the Secretary's books and records.

The Board needs to improve oversight of District financial operations. Although the Treasurer maintained adequate accounting records and the Chair reviewed the Treasurer's work, we found errors in the monthly budget-to-actual reports that the Treasurer provided to the Board. In addition, the Board has not developed policies determining a reasonable level of fund balance to maintain. As a result, the Board has accumulated significant surplus funds in the general fund. Finally, the Board did not ensure that annual financial reports and tax levy limit calculations were prepared and submitted to OSC as required.

Although the Board adopted reasonable budgets that included realistic estimates based on historical or known trends, the District relied on the appropriation of fund balance to finance recurring expenditures and, as a result, the budgets were not structurally balanced. As of June 30, 2014, the District reported an unrestricted fund balance that totaled $35,463 or .33 percent of the ensuing year's budgeted appropriations. Furthermore, the general fund operating cash balance decreased by over $2.5 million because of a financial statement reclassification of cash to restricted cash to agree with the District's reserve fund balances. The continued use of fund balance has resulted in its depletion. However, the Board and District officials have developed a multiyear financial plan to address current and long-term financial trends at the District.

Although the Board generally adopted reasonable budgets, they were not structurally balanced because the Board consistently appropriated fund balance to finance recurring expenditures. The Board's continuing use of fund balance, combined with significant unanticipated expenditures, caused the District's financial condition to decline. As of June 30, 2014, the general fund's unrestricted fund balance totaled $6,036, which was less than 1 percent of the ensuing year's budgeted appropriations. Furthermore, the District's general fund operating cash balance decreased by approximately $370,000 in one year. As a result, the District had to issue a tax anticipation note to meet cash flow needs during the 2014-15 fiscal year. In response to the District's fiscal stress, the Board was compelled to implement various cost-saving and revenue enhancement strategies. However, at the same time, the Board did not develop a multiyear financial plan to address the District's short- and long-term fiscal stability.

The District is experiencing significant fiscal stress. The District had no operating cash on hand and very little fund balance at the end of 2013-14 fiscal year to manage unforeseen events. The District incurred significant operating deficits in fiscal years 2010-11 through 2012-13. The District reported $379,000 of unexpended surplus funds as of June 30, 2014, which is less than 1 percent of the ensuing year's operations. The District is also experiencing cash flow problems. The District issues short-term debt to provide temporary cash flow and has improperly used a total of $7.5 million in reserve fund cash to help with cash flow in fiscal years 2012-13 and 2013-14. Furthermore, the District improperly recognized certain State aid long before it was received, which further impacted the District's cash flow and financial condition. According to District officials, the Board has relied on fund balance to finance operating expenditures because the Board did not want to raise taxes or reduce services despite reductions in State aid. The Board has approved moderate tax increases each year in order to help provide sufficient resources for annual budget increases and rising employee benefit costs, but relied on appropriated fund balance to balance the budget each year, including the 2014-15 fiscal year.

The Board did not perform an effective claims audit to ensure transactions were properly authorized and approved or claims were for proper Village purposes. Instead, the Board annually appointed one Trustee who was solely responsible for auditing all Village claims, which is inconsistent with Village Law. We found Village officials paid 34 claims totaling $32,332 without proper Board approval. Officials also did not ensure that these claims contained all necessary documentation or authorizations to facilitate an effective claims audit. While all the claims we reviewed appeared to be for proper and necessary Village purposes, the Board's lack of a proper claims audit process increases the risk that the Village could pay for expenditures that are unauthorized, excessive or unnecessary. The Board also did not adopt a comprehensive IT policy governing the Village's IT system or establish policies and procedures addressing crucial aspects of IT security, such as an acceptable use policy, data backup procedures or establishing a disaster recovery plan.

The Board did not adequately segregate duties which allowed the former Comptroller to perform duties related to the receiving and processing of cash receipts without oversight. For example, he collected cash receipts, made bank deposits and obtained and maintained bank statements. The Board did not mitigate this risk by ensuring that cash collected by the Comptroller was reconciled with collections remitted to him from other departments. As a result, $168,725 received by the Comptroller's office was not deposited and could not be accounted for. In addition, the Comptroller did not comply with the law. Cash receipts were not deposited within 10 days; some receipts were deposited between 11 to 67 days. (In February 2015, the former Comptroller pleaded guilty to second-degree grand larceny in the theft of $390,178 from the Town. The findings presented in our report are in addition to the $390,178 theft.)

The Board needs to improve its monitoring of the District's fiscal operations. The Board was not provided with the necessary financial reports and information to properly oversee operating and grant activities or to develop realistic or structurally balanced budgets. As a result, the District experienced financial difficulties and borrowed approximately $669,000 from grant funds to help pay operating costs. Although the District has repaid most of these funds, approximately $37,000 remains payable as of September 30, 2013. At the exit conference held on March 23, 2015, District officials stated they have since repaid an additional $12,000 to the grants and will pay the balance of $25,000 when the remaining grants with loan balances are closed. We also found the Board permitted the District to enter into an agreement to provide forestry services on lands outside the District to a business or businesses in which the former Director appears to have been affiliated, resulting in a potential conflict of interest. In addition, the Board did not establish written terms and rates for payment for these forestry services provided by the District, did not maintain records showing all work performed and did not ensure that all services were billed and payments were received. Finally, we found internal controls over cash disbursements were not appropriately designed or operating effectively. The Board did not adequately segregate disbursement duties, audit and approve all claims for payment and ensure that checks were signed by the Treasurer or an assistant Treasurer.

We found that County officials did ensure certain cash receipts were properly collected, recorded and deposited. The Board appointed standing committees to provide oversight of their respective departments' cash receipts processes, and each of the departments we tested also have their own written procedures. Additionally, the specific procedures established within each department are tailored to its operations to ensure moneys are collected, recorded and deposited intact and within a timely manner. We commend County officials for their attention to developing good cash receipts control systems and ensuring compliance with these systems.

Based on the results of our review, we found that the significant revenue and expenditure projections in the preliminary budget are not reasonable. The District's proposed budget for payroll, health insurance, retirement, debt and utilities exceeded the District's supporting documentation for those items. Consequently, the District has overestimated appropriations by $3.3 million. In addition, the District plans to use $2 million of their retirement contribution reserve fund. However, this reserve can only be used to pay for retirement contributions. The 2015-16 estimated cost for retirement are approximately $760,000. Therefore, using the remaining $1.2 million to fund other expenditures of the District is not an appropriate use of this reserve. Our estimate of revenues, excluding the use of fund balance and reserves, is less than our estimate of total appropriations by approximately $2.2 million which would create an operating deficit for the third consecutive year. The District's preliminary budget complies with the property tax levy limit.

District officials continually underestimated revenues and overestimated appropriations when they prepared and adopted budgets for the last three fiscal years, even though this poor budgeting practice was brought to the District's attention during our last two annual budget reviews. As a result, fund balance was higher than needed. Specifically, we found that the percent of unassigned fund balance as a percentage of the ensuing year's appropriations exceeded the 4 percent allowed by statute in two of the last three completed fiscal years. Furthermore, the District's practice of consistently appropriating fund balance that is not needed to finance operations is, in effect, a reservation of fund balance that is not provided for by statute and a circumvention of the statutory limit imposed on the level of unreserved, unappropriated fund balance. Better budgeting would have allowed operations to stay at the intended level with lower taxes. Finally, as of June 30, 2014, two of the reserves totaling $1.14 million appear to be overfunded. Specifically, the unemployment insurance reserve had a balance of $116,459, which is over 16.5 times the average annual expenditures and the capital reserve had a balance of $1,024,119 with no planned future expenditures.

Based on the results of our review, except for the following matters, we found that the significant revenue and expenditure projections in the tentative budget for the general, electric, library and parking funds are reasonable. However, the water and sewer funds' tentative budgets are not balanced and include a deficit of approximately $257,000 in the water fund and $155,000 in the sewer fund. Village officials told us they recognized the deficit and planned to raise water and sewer rates and reduce some expenditures in May 2015 to make up the difference. We recommend the Board address these deficits in order to avoid adopting budgets that include appropriations without sufficient financing sources. We had a similar finding in last year's budget review; the Board did adjust the rate structure in both funds and as a result of the actions taken by the Board, the funds are not projected to incur deficits for the current fiscal year. The Village's preliminary budget complies with the property tax levy limit.