As a result of combining funds from the Oppenheim-Ephratah School District and the St. Johnsville School District after the merger, the District began the 2014-15 fiscal year with fund balance in excess of the 4 percent limit. However in 2014-15 and 2015-16, the District's practice of overestimating appropriations caused the general fund to realize operating surpluses and fund balance to increase. Because the combination of the two school districts created a new entity, it was prudent for the Board to budget conservatively for the first year of operations. However, after that first year, appropriations should have been budgeted realistically, and accumulated fund balance could have been used to reduce the tax levy, finance one-time expenditures, fund needed reserves or pay off debt. We reviewed six months of fuel inventory records and found they did not reconcile with the amounts of fuel pumped according to tank readings. We found that 10,269 gallons of unleaded fuel were pumped from the tanks, but only 9,475 gallons were accounted for on the fuel use charts. We found that during 26 weeks, the drivers recorded that they pumped 8,855 gallons of diesel fuel, but the tank readings indicated that 8,961 gallons had been pumped from the tank. The Transportation Supervisor was unsure what caused these discrepancies. He told us they might have been due to recording errors or the fuel pumps not having been calibrated. Therefore, District officials cannot be sure they measure fuel dispensed accurately.

The District's adopted Length of Service Award Program (LOSAP) point system does not comply with New York State General Municipal Law because it does not award the correct amount of points for some activities. The 2016 LOSAP records for 15 active members were inadequate to support 917 of 1,176 points earned by members. In addition, while District officials used competitive bids, they did not always follow their policy when obtaining a minimum number of quotes for purchase and public works contracts. District officials did not obtain the required number of written quotes for 12 purchases totaling $100,127 made during the audit period.

The Board did not adopt policies and procedures relating to cafeteria collections. We reviewed all 233 daily sales reports with cafeteria collections totaling $74,594 and found the collections were generally deposited timely and accurately recorded in accounting records. However, 43 daily sales reports totaling $17,862 contained variances between the amount of cash and checks recorded and deposited totaling $3,610. We determined $3,360 of these collections were for checks that were inaccurately recorded as cash collections in the point of sales system. These collections were related to the District's snack program and other miscellaneous receipts. We also identified four instances when cafeteria collections totaling $250 were not deposited intact.

The City's leave accrual processes are decentralized and not administered uniformly, resulting in errors in employees' leave accruals. In addition, officials did not adequately oversee the department payroll clerks who maintained employee leave accrual records, or periodically review leave records to determine whether leave used was properly recorded. City officials did not follow established City policy and collective bargaining agreements (CBAs) regarding employees' vacation balance carryover limit. In the six departments we audited, 31 of the 120 employees' records reviewed exceeded the maximum amount of vacation that City policy or CBAs allowed them to carry over to 2017, by a total of 9,707 hours with an estimated cost of $431,000. The City also paid over $903,000 in police overtime to cover compensatory leave, contrary to CBAs. Finally, supervisors did not always review time and attendance records for accuracy or pre-approve overtime and review overtime hours reported.

Each department tracked hours worked differently. Therefore, we reviewed the time records of all 109 employees, including time sheets, vouchers and time cards. While half of employees (50 percent) used some form of time record to record the number of hours worked, 11 full-time employees did not use any time records to document the hours worked and 43 seasonal Recreation department workers were not required to use time sheets or timecards. Seasonal employees' time was submitted by their supervisor who submitted the total hours these employees should be paid but the Recreation department supervisor did not maintain any documentation showing the hours the employees actually worked. In addition, leave request forms were not used to monitor paid leave time.

The Board did not effectively manage town-wide (TW) fund balance levels. From 2014 through 2016, actual revenues exceeded actual expenditures by a total of nearly $148,000 (or 6 percent). Each year, the adopted budgets included planned deficits averaging $573,000. For 2017, we project a surplus of more than $665,000 while the adopted budget planned for a deficit of more than $643,000. As a result, the TW fund balance is excessive and will continue to increase unless the Board takes action. The majority of the operating surpluses occurred because the Board did not develop sound budget estimates for either revenues or expenditures, and also received significant new revenues for gaming-related revenues from the Casino. These gaming-related revenues, totaling almost $500,000, were not included in the Town's budget estimates. Officials told us they did not believe in the reliability of the gaming-related revenues, and therefore, did not include them in the budgets. In total, between 2014 and 2016, the Town received $1.26 million (or 95 percent) more than was estimated in the adopted budgets, averaging $418,000, and actually spent $609,000 less (or 20 percent) than anticipated, averaging $203,000. Based on historic spending levels, the Town's TW fund balance could cover more than two years of expenditures. In fact, the 2017 quarterly gaming-related revenues alone represent 4.2 years of TW real property tax levies. Therefore, the Board needs to create long-term capital and financial plans that set forth the Town's long-term goals.

District officials did not always obtain the number of quotes required by their policy. When officials obtained quotes, the supporting information was not always documented and retained. Although the purchases we reviewed were for appropriate District purposes and some of these purchases contained quotes, the Board did not ensure that required number of quotes were always obtained. District officials indicated they discarded some quotes that were obtained. Without such information the Board is unable to determine whether District officials complied with the policy when it conducts an audit of claims.

District officials did not seek competition or properly administer or award competitive bids for purchases totaling $13 million. The District also did not seek competition for eight professional services providers paid approximately $1.4 million. Furthermore, an unauthorized employee was allowed to override the approval process for 31 purchases totaling $913,856. The District allowed improper access to its accounting software and vendor files were inaccurate. In addition, the District paid 49 claims totaling $1.0 million without proper documentation. Finally, claims totaling $2.4 million were paid without the claims auditor's authorization.

District officials accurately paid salaries and wages. We reviewed the gross pay calculations of 25 employees over four payroll periods, totaling approximately $240,000, to determine whether salaries and pay rates were authorized, overtime rates and hours were accurately calculated, and other provisions of applicable employment agreements were accurately calculated and paid. Except for minor discrepancies that we discussed with officials, District officials accurately calculated and paid gross salaries and wages. We commend District officials for establishing a well-designed system for processing payroll to ensure that employees are accurately paid the salaries and wages to which they are entitled.

Officials established adequate controls over higher risk receipts and disbursements and have an annual certified public accountant (CPA) audit of all financial activity. Although revenue estimates were reasonable, expenditures were not. District officials consistently adopted budgets with overestimated expenditures throughout our audit period. Actual expenditures were 17 percent less than budgeted in 2014 and were 38 percent less than budgeted in 2016. These variances occurred mainly because District officials conservatively budgeted for equipment in each of those years. This led fund balance to increase from $375,000 to $486,000 (23 percent increase) from 2014 through 2016. This leaves the District with more than a year's worth of appropriations in fund balance. Furthermore, the Board has not adopted a fund balance policy outlining fund balance levels to be maintained or threshold amounts for reserves to determine the use for these surplus funds. Although the District has a capital reserve of $300,000, officials do not have a formal capital plan in place. As a result, it is difficult for the Board to determine the tax levy in the residents' best interest without such plans. Finally, the Treasurer had not filed the District's annual financial report since 2012.

The Board and District officials need to improve their budgeting practices to ensure fund balances are reasonable. District officials appropriated, on average, $638,300 of unrestricted fund balance as a financing source each year for the 2014-15 through 2016-17 budgets. However, because the District generated surpluses each year, the amounts appropriated were not needed to finance operations. We found that the recalculated unrestricted fund balance exceeded the 4 percent statutory limit for 2014-15 through 2016-17 ranging from 5 to 10 percentage points. In addition, reserves were not used as intended and could be overfunded by $1.8 million as of June 30, 2017. We examined the District's plans for funding and using these reserves. The balances retained in the repairs and capital reserves appeared reasonable. However, the unemployment insurance, tax certiorari, employee benefit accrued liability, workers' compensation and retirement contribution reserves were overfunded and not used as intended.

The Board has developed a procurement policy that requires City officials to seek competition when contracting for professional services. However, the policy exempts City officials from seeking competition for certain professional services including lawyers, accountants, auditors, financial advisors, information technology advisors, real estate brokers, recruitment agencies for professionals, planners and landscape architects. In addition, City officials are not required to provide justification when seeking competition would not be in the best interest of the taxpayers. We reviewed the procurement of services from 30 professionals totaling approximately $12.4 million during the 2015-16 and 2016-17 fiscal years. City officials sought competition for services from eight professionals totaling approximately $3.2 million. However, City officials did not seek competition for services from 22 professionals totaling approximately $9.2 million. Based on the information reviewed, eight of the 22 professionals had been working for the City five years or more. For example, the City has been using the same vendor for audit services for at least 30 years.

The Board adopted a fund balance policy stating that the Town should adopt budgets with an unrestricted fund balance level of not less than 15 percent and no more than 100 percent of the total operating general and highway fund expenditures. The policy does not address any factors that would affect the level of fund balance, such as the timing of the Town's receipts and disbursements (cash flow), the volatility of revenues and expenditures, or the need to create reserve funds, and whether to include contingency appropriations in the annual budget. This information would help the Board and Town officials determine a reasonable level of fund balance to retain. Fifty-eight percent of the Town's budgeted revenues are derived from serving as a wind turbine host community. This revenue is normally received in November each year. Because the Town will have paid the bulk of its annual expenditures before this revenue is received, the Board should use a cash flow analysis to estimate a reasonable amount of unrestricted fund balance to maintain each year to help fund these costs. The Town Supervisor told us that the Town imposed a tax levy in 2016 and 2017 because officials believed the Town would deplete operating cash before it received the wind energy revenue in November. We compared the 2016 and 2017 budget and did not identify significant decreases or depletion of any other revenue sources. The Town had sufficient cash flow and imposed a tax levy that was higher than necessary. Finally, the Board and Town officials did not develop a multiyear financial plan. Had such a plan been in place, it would have been a useful tool for the Board to use to identify revenue and expenditure trends and consider the impact of budgeting decisions on future fiscal years.

The Supervisor is not adequately fulfilling related financial duties. The Supervisor did not ensure accounting records were accurate and complete and did not deposit receipts in a timely manner. We found that 93 percent of receipts reviewed totaling $1.47 million were deposited, on average, 35 days after receipt. The Supervisor was unaware of the statutory requirement for deposits and only made one deposit at the end of each month. The Supervisor also misplaced two checks totaling $2,015 from the Town Justices. Finally, the Supervisor has not submitted an annual accounting to the Board for fiscal years 2015 and 2016 and has not provided the public accountant hired to audit the books and records with adequate information. As a result, the 2015 and 2016 annual audits have not been performed.

We compared budgeted appropriations to actual expenditures for 2012-13 through 2016-17 and found that District officials overestimated appropriations by over $43 million. Because annual budgets contained significantly overestimated appropriations each year, it appeared that the District needed to increase its tax levy and use appropriated fund balance to close projected budget gaps. For the same period, the Board increased the property tax levy by a total of $7,982,396 or 12.4 percent and appropriated a total of nearly $27.2 million of fund balance. However, only $1,375,819 of appropriated fund balance was actually needed and was only needed in one year of a five-year period. Due to the inflated estimates for certain appropriations, the District had operating surpluses in four of the last five years totaling $23.4 million. Furthermore, the Board did not adopt a fund balance policy to outline the desired level of year-end fund balance to be maintained by the District. As a result, the total fund balance increased to $58.9 million as of June 30, 2017. While $22.9 million of the June 30, 2017 fund balance was restricted in reserve funds, the unrestricted fund balance grew from $17.3 million as of June 30, 2013 to $27.7 million as of June 30, 2017. As a result, the unrestricted fund balance exceeded the statutory limit. However, when the appropriated fund balance not used and excessive or unnecessary reserves are included, the District's recalculated unrestricted fund balance ranged from 17.12 to 24.26 percent of the ensuing year's budget, exceeding the 4 percent statutory limit in each of the last five years. Finally, six reserves were overfunded by $8 million.

The Town did not procure goods in accordance with the competitive bidding requirements. We found that the Town did not procure two items totaling $108,558 in accordance with GML. These purchases consisted of $40,387 for a 2017 pickup truck and $68,171 for diesel fuel during our audit period. We also expanded our review of diesel fuel purchases back to January 1, 2015 and found the Town did not procure diesel fuel totaling $56,395 during the 2015 fiscal year in accordance with GML. As a result, the Town expended $21,287 more than necessary for diesel fuel purchases. In addition, the Clerk did not record all collections received in a timely and accurate manner. Cash deposits were not supported. Monthly reports and remittances were not accurate and timely. Accountability analyses were not prepared by the Clerk and she had a $1,100 unidentified balance in her Clerk bank account as of July 31, 2017. Finally, the Board did not audit or obtain an audit of the Clerk's records and reports for the 2016 fiscal year.

The building selected by the Board appears to meet all of the needs identified on the School's facilities requirements checklist. However, a sufficient cost-benefit analysis of this or other buildings was not completed. We analyzed the six buildings included in the comparison table that the School had toured, as well as one building that was included as a comparison in the appraisal of the selected building, to determine if the School could have acquired a comparative building for a lower price. While there are certain other factors to be considered, such as site location and the facilities included (e.g., parking, play area) for perspective, the School's comparison of available buildings did not include sufficient information on such factors. Only three of the buildings included on their comparison mentioned facilities such as parking, green space and location. Due to the lack of a detailed analysis based on these multiple factors, we performed an analysis based on square footage and cost per square foot. It appears that the School could have paid between $14 and $39 per square foot for other buildings ranging in size from 46,000 to 120,000 square feet, compared to the nearly $51 per square foot actually paid for the 61,000 square foot Hertel building that was selected. In just looking at cost, if one of these buildings had been selected, the cost per square foot would have been between $12 to $37 lower.

Authority officials did not adhere to the procurement policy regarding obtaining quotes for purchases and public works. During our audit period, Authority officials did not obtain quotes for public works projects totaling $18,762 and purchases contracts totaling $10,680 or solicit requests for proposals (RFPs) for professional services totaling $26,754. Authority officials did not adopt comprehensive IT policies or a disaster recovery plan. In addition, Internet use is not monitored and the server is not in a secured area.

The District's IT policies and procedures were not adequate. Although the District had computer/Internet use policies, they have not been revised for changes in technology since December 2006. In addition, the Board has not adopted policies and procedures for personal, private and sensitive information (PPSI) data classification, wireless security, managing mobile computing and storage devices, and cybersecurity training. The District also does not have written procedures for granting, changing and terminating access rights to the networked computer system and to specific software applications. The District does not provide, or require employees to attend, any formal cybersecurity awareness training. District staff were able to access websites unrelated to District activities, such as games, hobby sites, job searching, social media, shopping and travel. This occurred because District officials did not sufficiently configure the web filtering software to block access to these sites.

We found that although the Board has not developed formal written fund balance and reserve policies or comprehensive multiyear financial and capital plans, it has used available fund balance and reserves, as appropriate, to avoid significant real property tax increases. The Board adopted realistic budgets from 2014 through 2016 and real property tax levies have remained relatively stable. The Highway Superintendent created a multiyear equipment replacement schedule for the Board's use when budgeting. Town officials appropriately used the machinery capital reserve to replace equipment as planned. We commend Town officials for implementing pertinent components of a multiyear plan and maintaining stable fund balances and reserves while keeping real property taxes relatively flat. However, officials could improve overall financial management and improve transparency if they adopted comprehensive multiyear planning.