Officials maintained the District's operating funds at one financial institution. During the audit period, operating funds were deposited in three interest-bearing checking accounts with a monthly interest rate of .1 percent. The average amount of available funds for investment for the tax collection account was $957,676 and the operating account was $435,461. The District realized interest earnings related to its operating funds of $3,072 during the audit period. We found that officials could have invested available operating funds averaging approximately $1.4 million in another financial institution with available interest rates between .80 percent and 2.31 percent or an average interest rate of 1.7 percent during the audit period. If officials had invested available funds in this financial institution, interest earnings could have been increased by $45,330 for the audit period.

Payroll calculation errors cost the District $3,638 and errors totaling $9,100 occurred with manual leave accrual entries. In addition, five employees had 21 time sheets lacking proper approvals and two employees had eight time sheets that were missing. Furthermore, the former payroll supervisor worked overtime hours that were not supported. Also, she did not record taking a lunch break on 297 of 315 days, resulting in overtime or extra pay. Finally, we found that errors occurred in the leave records maintained for 13 of the 26 (50 percent) employees tested.

The Board did not always adopt reasonable budget estimates. The Board overestimated expenditures by $8 million (8 percent) in 2016-17, resulting in an operating surplus of more than $6.2 million. Because District officials did not use historical trends to develop the budgets and instead relied on budget transfers, District officials made excessive adjustments to the budget, especially in the last five years when the budgets were adjusted on average of 12 percent. The District had unrestricted funds totaling $10.6 million and $12 million at the end of 2016-17 and 2017-18, respectively, which exceeded the statutory limits of $3.9 million and $4 million.

The City's proposed budget includes appropriations of $68,298,071. The proposed water fund budget includes $5.1 million in metered water sales revenue, which appears reasonable, pending Board approval of water rate increases. Budgeted overtime funding for police ($1.1 million) and firefighters ($800,000) is likely underestimated by a total of at least $910,000. The budgeted $565,000 in severance payments does not include appropriations for budgeted layoffs in 2019, and may not be sufficient if the layoffs do not take place until 2020. The budgeted $50,000 for unemployment insurance may be underestimated by up to $291,000, based on proposed layoffs. The proposed $581,000 in contingency appropriations may not cover unexpected expenses if these funds are used to pay underestimated police and overtime costs. Under the proposed 2020 budget, the City will exceed its Constitutional Tax Limit (CTL); however, City officials indicated they decreased the levy to be within the limit. The City faces potential increased salary costs when its collective bargaining agreement (CBA) with the International Association of Fire Fighters, which expired in 2017, is settled

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Town's 2020 tentative budget includes a proposed tax levy of $58,426,602.

The significant revenue and expenditure projections in the proposed budget are reasonable. The County's proposed budget includes a tax levy of $142,186,245.

District officials could improve their management of the District's financial condition. We found officials overestimated appropriations by a total of $7.1 million from 2015-16 through 2017-18, which resulted in most of the appropriated fund balance not being needed to fund operations. The tax certiorari reserve was overfunded by $963,200 (615 percent) as of June 30, 2018. In addition, encumbrances were overstated by a combined total of $264,000 from 2015-16 through 2017-18. Finally, although surplus fund balance was reported at or below the statutory limit from 2015-16 through 2017-18, recalculated surplus fund balance exceeded the statutory limit ranging from 7.2 percent to 10.9 percent.

Based on the results of our review, except for certain matters, we found that the significant revenue and expenditure projections in the proposed budget appear reasonable. The City did not appropriate any fund balance as a financing source in the 2020 general, water, sewer or refuse fund budgets. The City's draft audited financial statements reported that as of December 31, 2018, unrestricted fund balance in the general, water, sewer and refuse funds were approximately 20.2 percent, 46.5 percent, 26.6 percent, and 30.3 percent, respectively, of the following year's budgeted appropriations. City officials told us they are nearing a settlement on two tentative collective bargaining agreements (CBAs), therefore it is likely these CBAs will be in place in 2020 and the Common Council and City officials should budget accordingly. The Common Council also needs to consider whether the contingency appropriations are adequate if arbitration appeals are settled and unanticipated retirements occur. Finally, the proposed budget includes a tax levy of $13,044,260 which is the maximum levy that the City can impose without the Common Council needing to override the tax levy limit.

Significant revenue and expenditure projections in the proposed budget are reasonable. However, while the estimated revenues for the proposed refuse fund budget appear reasonable, they include $250,000 in estimated revenues for fees that the City has not previously assessed. Also, the minimal contingency appropriation in the proposed refuse fund budget provides the City with a limited amount of flexibility in the event of unforeseen circumstances that may require additional funds. The City's capital plan for the purchase of equipment and vehicles for the general and refuse funds remains unfunded through the proposed budget and instead will be financed by issuing debt. In addition, one of the City's collective bargaining agreements (CBA) is expired and the City faces potential significant increased salary and wage costs in the event that the CBA is settled in 2020. Finally, the City's proposed budget includes a tax levy of $26,304,399.

The District incurred operating deficits in two of the last three fiscal years, resulting in a $12.3 million (20 percent) decrease in total fund balance − from $60.3 million as of June 30, 2017 to $48 million as of June 30, 2019. This was due, in large part, to use of approximately $10.5 million in fund balance to retire debt in 2017-18. Approximately $36.5 million of fund balance was restricted in reserve funds as of June 30, 2019. However, approximately $8 million was unassigned fund balance. This is equivalent to 4.1 percent of the next year's budget, which is still slightly above the statutory limit. Despite incurring operating deficits, the District annually adopted budgets that overestimated expenditures by $1.8 million to $8.3 million and underestimated revenues by $1.8 million to $6 million. While unanticipated State aid generally accounted for revenue variances, employee benefits represented the largest portion of overestimated appropriations. Finally, the Board has not adopted a reserve fund policy or created a formal written plan to govern the funding and use of reserves. The Board generally reviews the District's reserves annually. However, we question the need for the insurance reserve totaling $371,333 as of June 30, 2019, as the District has insurance coverage for known risks.

The Board properly evaluated projects prior to approving financial benefits. However, the Board could improve its monitoring and verification of project performance related to job creation and capital investment. For example, although the payroll tax forms submitted by five of 27 companies did not support their employment reports, OCIDA officials did not request additional information to verify the employment information. In addition, OCIDA does not require companies to provide periodic progress reports or other documentation to evidence their actual capital investments. We also found that four companies received sales tax exemptions that exceeded approved amounts by a total of $173,446. Of this amount, officials properly recaptured $97,020 from one company.

The Board did not properly establish reserves or establish a reserve fund policy. In addition, the Board did not ensure that fire protection contracts were signed, that the services provided were billed for and that the costs of services were equitably allocated between service areas. The District provides fire protection services to the Town, funded by real property taxes, and to the Town of Roseboom and portions of the Town of Middlefield, funded by fire protection contractual agreements totaling $10,075 for 2018. As of March 31, 2019, the District had not received payments for 2017, 2018 or 2019 from the Town of Middlefield totaling $3,225 because District officials failed to bill the Town. Furthermore, the Board did not ensure the Annual Update Documents (AUDs), which are the Annual Financial Reports, are completed and submitted to our office. Finally, the Board did not annually audit the Treasurer's records.

The Board overestimated budgeted appropriations by an average of $2.6 million (7 percent) in each of the last five years (2013-14 through 2017-18) for a combined total of almost $12.6 million. As a result of the overestimated appropriations, the District experienced annual operating surpluses resulting in a five-year cumulative operating surplus exceeding $9 million, which resulted in excessive fund balance totaling approximately $6.5 million as of June 30, 2018. District officials maintained a surplus fund balance exceeding the statutory limit in each of the past five years (2013-14 through 2017-18). Surplus fund balance as a percentage of the next year's budget ranged between 17 and 23 percent and the statutory limit was exceeded by amounts ranging between $4.9 and $7 million. Our further review of surplus fund balance revealed that appropriated funds were not always used as budgeted. When unused appropriated fund balance is added back, surplus fund balance exceeded the allowable statutory limit each year by 13 to 21 percentage points.

Officials do not regularly review network user accounts and disable those that are determined to be unnecessary. In addition, the Board does not have an adequate contract and separate service level agreement for information technology (IT) services provided by the Broome Tioga Board of Cooperative Educational Services' South Central Regional Information Center (SRIC). Although SRIC provided a disaster recovery plan for the District, it is incomplete. The plan is clearly a template and lacks information. Finally, officials do not provide periodic IT security awareness training to staff.

As a result of our audit, we issued a report, dated October 2018, identifying certain conditions and opportunities for Village management's review and consideration. We revisited the Village in August 2019 to review progress in implementing our recommendations. Our follow-up review was confined to interviews with Village personnel and inspection of certain documents related to the issues identified in our report. Based on our limited procedures, it appears that the Village has made modest progress implementing corrective action. Of the 13 audit recommendations, two recommendations were implemented, seven recommendations were partially implemented and four recommendations were not implemented.

The Board did not establish policies to provide reasonable assurance that fuel was used for its intended purpose and properly accounted for. In addition, District officials did not design procedures to ensure fuel use and inventory records were properly maintained and reconciled. As a result, the responsibility for managing transportation fuel inventories was not clearly assigned and District officials did not maintain complete and accurate inventory records to safeguard and account for fuel inventories. We found that complete fuel inventory, delivery and usage records are not maintained and reconciliations are not performed. In addition, we found that 17 of 78 keys (22 percent) that allowed access to the fuel meter could not be located.

The surplus fund balance in the general fund exceeded the 4 percent statutory limit for the past three fiscal years. As of June 30, 2018, the District's surplus fund balance was $2.15 million, which was 4.9 percentage points or nearly $1.2 million over the legal limit. During the past three fiscal years, the District appropriated fund balance and reserves that it did not use and generated operating surpluses totaling about $5 million. The District also overestimated appropriations by an average of $2.4 million each year or by 10.5 percent. During this time, total reserves increased by $3.9 million. District officials have not developed a comprehensive multiyear financial plan.

We reviewed 1,963 water and electric cash receipts totaling $184,500 collected during four months of our audit period. We found that they were properly recorded and deposited timely and intact (in the same amount and form – cash or check – as received). In addition, we reviewed water and electric billings for 33 customer accounts and found that water and electric use was properly billed. However, the Deputy Clerk-Treasurer (Deputy) was responsible for recording water and electric use, printing and sending bills to customers, collecting payments, recording payments in the customers' accounts and making adjustments to customer account balances with no oversight. As a result, the Village had an increased risk that water and electric collections could be lost, stolen or misappropriated without detection because the Board did not adopt written cash receipt policies, Village officials did not properly segregate the Deputy's cash receipt duties and the Treasurer did not adequately oversee the Deputy's work.

The District lacked adequate policies and procedures to ensure Medicaid claims were submitted and reimbursed for all eligible services provided. Claims were not submitted and reimbursed for 312 eligible services totaling $11,896 and service providers did not document 948 scheduled services totaling $66,695 in the special education system as provided. Had these services been appropriately documented and claimed, the District could have realized potential revenues totaling $39,296. In addition, service records were not available for 10 students. As a result, we could not determine whether the District submitted all eligible claims for these students.

We selected all 16 assets valued at $440,242 listed as disposed of during our audit period and found none had Board approval. In addition, although District officials were able to provide documentation regarding the means of disposal for the two buses disposed of during the 2017-18 fiscal year, they could not provide documentation indicating the means of disposal, such as resale, donation or trashing of the items, for the remaining 14 assets. These assets had a book value of $4,483 and included a radio system ($1,657), a phone system ($1,183), an audio visual and lighting system ($871) and a communication system ($772). In addition, District officials did not maintain up-to-date disposal records. Finally, 10 of 25 assets (40 percent) totaling $43,330 were not traced to locations.