During our audit period, the District made purchases between $1,500 and $19,999 from 148 vendors totaling $824,117. We randomly selected purchases made from 24 vendors totaling $119,741 and found that District officials did not obtain competitive quotations for purchases made from nine vendors totaling $35,214. In addition, five purchase orders totaling $30,191 were dated after the date of the invoices, resulting in confirming purchase orders. For example, one purchase order for heating, ventilation and air conditioning repair was dated June 30, 2014, but had corresponding invoices from February 2014, March 2014, April 2014, May 2014 and June 2014. By placing orders for goods or services without a valid purchase order, District officials are committing the District's funds without proper authorization. The remaining 15 vendors in our sample included nine purchases made under a State or County contract and six purchases in which the District took adequate measures to solicit quotations. Because District officials did not consistently adhere to established policies and procedures and ensure that goods and services were acquired through a competitive process, they do not have assurance that the District is receiving the best price for items purchased.

The Owners and Board are not economically providing services to their customers. We surveyed 59 plants within New York State with the same combined collection system as the Binghamton plant. We selected eight of these plants with similar preliminary and primary treatment processes, flows or experienced similar disaster events as the Binghamton plant. We compared the total cost per million gallons daily (MGD) of treated sewage flow of these eight selected plants to the Binghamton plant. We found that the Binghamton plant had the third highest annual average costs per MGD from 2012 through 2014. The main costs attributable to the high costs at the Binghamton plant were chemicals, equipment, capital-related costs and professional services including legal and engineering fees. These three cost components represented 41 percent of the total costs at the Binghamton plant, while these costs averaged 14 percent of the total costs at the other plants. In addition, the quality of the discharged treated flow currently does not meet DEC's regular permitted thresholds. As a result, the DEC issued a consent order requiring the Owners to construct a new facility with a completion deadline of April 2017. If the new facility is not completed by the deadline, the Board and Owners could be fined $50,000 plus a maximum of $1,000 per day until the construction is completed. These potential fines would add significant cost to operations that would be passed on to the users.

The Board needs to adopt long-term financial plans to effectively manage the Town's finances. The Board has adopted budgets that have relied heavily on appropriated fund balance that cannot be maintained in the future. For example, the town-wide (TW) general and highway funds available fund balance for emergencies and unforeseen expenditures has declined to $23,880 (5 percent) and $20,831 (8 percent), respectively, of the 2015 appropriations, as of December 31, 2014. Fund balance will not be able to continue to finance nonrecurring expenditures or operating deficits and will require a long-term plan to be able to fund future needs. In addition, the Town-outside-village highway fund has a negative cash balance of $41,628 at the end of 2014. This occurred because all funds are comingled in one bank account and appropriate accounting entries were not made to record a cash advance from the TW fund. We also found that the former Court clerk did not retain receipts for all 148 transactions made during the former Justice's term and 58 transactions, or 35 percent, made during the current Justice's term. In addition, the interim Court clerk and current Court clerk did not retain receipts for 18 transactions, or 5 percent, during the current Justice's term. We also identified 35 missing receipt numbers. There was a valid explanation for 15 of these missing receipts. Town officials were unable to explain or provide support for the remaining 20 receipts, and, therefore, cannot ensure that all the Justice's moneys received were deposited and recorded completely and accurately.

The Town has historically experienced a strong financial position due in part to the sales tax revenues it receives from the County. The Supervisor and Board have not focused on developing budgets that mirror the actual results of Town operations because the revenues, in particular sales tax, were always abundant. As a result the Town has not levied a Town real property tax in over 20 years. However, in recent years the Town has relied on appropriating fund balance to continue operating without a tax levy. Such a strategy of meeting reoccurring expenditures with a one-shot financing source like fund balance cannot be continued indefinitely. This strategy will be further tested in the future by the County's decision to modify its sales tax sharing agreement, which will reduce the amount of sales tax revenue the Town will receive, thus placing new revenue constraints on Town operations. The change in the Town's fiscal environment has had an immediate impact on the town-wide funds which have seen an 82 percent decline in fund balance over the last three years. While the town-outside-village funds still have substantial resources, their continued fiscal health is still at risk because of the Board's decision to replace declining sales tax revenue with fund balance. The Board has not developed multiyear financial plans to address the use of fund balance to finance operations, the continued reduction of sales tax revenues, establishing reserve funds, or purchasing and financing future capital assets.

District officials have established a comprehensive purchasing policy and procedures that provide guidance as to when items must be competitively bid and when proposals or quotes should be obtained for purchases not required to be competitively bid. District policy requires that the procurement of professional services, including insurance, will be awarded based upon District merit, recommendation and formal requests for proposals (RFPs). We commend the District for establishing and enforcing appropriate procurement policies and procedures.

Over the last two years, the District's tax levy has not increased. However, District officials' budgeting practices generated $1.2 million in net operating surpluses. As a result of these operating surpluses, the accumulated unrestricted fund balance would have exceeded the statutory maximum of 4 percent of the ensuing year's budget. In order to reduce fund balance and stay within the statutory limit, District officials overstated liabilities and accumulated excessive reserve funds. In addition, the Board has repeatedly appropriated fund balance, which has gone unused during the same period. When adjusting for those items, the effective percentage of unrestricted fund balance is 16 percent of the 2015-16 appropriations, which exceeded the 4 percent statutory limit. District officials' continued use of these budgeting and accounting practices resulted in taxpayers paying more than necessary to sustain District operations. As a result, the District's general fund's unrestricted fund balance increased to more than $2 million as of June 30, 2015.

We selected 30 assets totaling $377,252. We found that 10 assets valued at $225,307 could not be located and 10 assets valued at $91,704 were either not tagged or the asset tag information on the tag did not agree with the accounting records. Furthermore, nine assets valued at $15,354 could not be located on either asset list and 20 assets valued at $21,135 recorded as disposed of did not have disposal request forms from the departments responsible for those assets. As a result, District officials and taxpayers have no assurance that all District property can be accounted for.

We found the Justices did not ensure that all fines and fees were properly collected. Both Justices did not generate and review balance due reports and one Justice did not generate and review the pending cases report. As a result, the Court did not request the suspension of the driver's licenses for two individuals who had outstanding ticket balances greater than 60 days. In addition, Court reports indicate that unpaid fines and fees may total up to $399,321 on tickets ranging from 1989 through 2015 and that over 11,000 tickets dating as far back as 1985 appear to be pending (unpaid). As a result, there is a risk that not all money due to the Court has been collected and reported. By reviewing those reports the Justices can systematically monitor and resolve outstanding issues and ensure fines and fees assessed by them are properly collected.

Although the Clerk's office had cash receipts totaling $ 3.48 million in 2014, County officials have not ensured that proper internal controls have been established. The Clerk has not established written policies and procedures for cash receipts and cash receipts duties are not adequately segregated. In addition, the Clerk is not providing oversight as a mitigating control and employees are recording some cash receipts in the computer system under a shared generic user name. As a result, it is impossible to hold any one employee accountable in the event that errors or abuse occur. While our testing found receipts were properly recorded and deposited timely and intact, the system of controls should be improved.

Although the Board established systems and procedures for managing, accounting for and reporting the District's financial operations, they should be strengthened to provide for better transparency and accountability of Board actions. Board minutes did not provide an accurate picture of the Board's actions, and certain contracts were not approved until weeks or months after being signed. As a result, transparency is compromised and the District is at risk of not receiving the services desired at the intended price.

District officials have generally taken appropriate action to manage the District's financial condition. Although the District generated operating deficits of approximately $160,000 in fiscal year 2011-12 and approximately $375,000 in 2012-13, they were largely planned. District officials also implemented multiple cost savings actions that aided in improving the District's financial condition and resulted in operating surpluses of approximately $70,000 for 2013-14 and $380,000 for 2014-15. The District's fund balance increased by 20 percent in 2014-15, which improved its financial condition and ability to plan for the future. However, the District's multiyear financial plan does not address its debt share or declining enrollment. These factors could adversely affect the District's financial condition and, therefore, should be planned for.

The Board consistently adopted budgets with overestimated expenditures that generated operating surpluses and resulted in excessive general fund balance. Further, although District officials reserved money to prepare for future contingencies, they did not always include the funding of reserves in the budgets voted on by taxpayers. Instead, the Board allocated amounts to reserves at the end of each fiscal year to reduce unrestricted fund balance to the statutory limit. These actions diminish the transparency of District finances to the taxpayers. As a result, two of the District's eight general fund reserves, which have balances totaling $8.08 million, are overfunded and potentially unnecessary. The District generally does not use the reserves and instead covers related costs with tax levies and liability insurance. The District has also made it a practice to over-subsidize the school lunch fund, resulting in 2013-14 year-end fund balance of $519,390, which exceeded the federally regulated limit by over $45,000. Fund balance grew to $580,017 at the end of 2014-15. Additionally, the District maintained an unsubstantiated balance of $5 million in the debt service fund that should be used to pay off debt or otherwise reduce the general fund tax levy.

Town officials did not monitor fuel usage or ensure Town employees performed reconciliations of gasoline and diesel fuel consumption. As a result, officials were unaware that 23,151 gallons of gasoline totaling approximately $51,900 was unaccounted for. Because staff did not adequately record diesel fuel consumption or perform monthly fuel inventory reconciliations, the Town has an increased risk that diesel fuel could have been lost, wasted or misused. In addition, Town staff routinely circumvented the Town's purchase order system by issuing purchase orders after obtaining goods and services (confirming purchase orders), thereby avoiding the preapproval process that occurs through the Comptroller's Office. From a random sample of 49 purchases, we found that 40 (82 percent) totaling $139,584 were made without being preapproved. Finally, the Board needs to improve its oversight of funds collected by the recreation department. The Director did not ensure that records were properly maintained to allow for review and audit and did not deposit receipts in a timely manner. We reviewed 127 receipts totaling $17,840 for timeliness of deposit and found that the Director did not deposit any of the receipts in a timely manner.

The District is serving nutritious meals to its students. However, the meals cost more to prepare than the revenue generated by the meal sales. In addition, the District's productivity level for meals per labor hour is below the industry averages. Although the industry averages may not be achievable given certain District conditions, District officials can use the industry averages to monitor operations and work towards increasing productivity. The District reported deficits in its school lunch fund totaling more than $230,000 over the last three fiscal years. During this same time period, the fund's assigned unappropriated fund balance declined to $0. Ultimately, the fund will require a subsidy from the general fund, which materially affects the tax levy growth.

The Board and District officials did not effectively manage fund balance in accordance with statute. Over the last four years, District officials have overestimated expenditures and used very little of the revenue from the Districts' wind power agreement to reduce real property taxes even though that agreement has generated over $32 million since 2006-07. As a result, the District's unassigned fund balance more than doubled from $5.3 million in 2010-11 to $10.8 million in 2013-14. The unassigned fund balance as a percentage of next year's budgeted appropriations increased from 21 percent to 42.6 percent – nearly $9.8 million over the 4 percent limit. Further, District officials have not developed adequate multiyear financial and capital plans to address how they will use wind power revenues and have been using the insurance and liability reserve funds (with accumulated balances totaling $2 million) as repositories for even more excessive fund balance. Despite significant wind power revenues, District officials have levied $3.79 million in taxes each year from 2010-11 through 2013-14 and have increased the tax levy to $3.87 million for 2014-15.

District officials have established adequate controls over the claims processing function that ensure claims are audited in a timely manner, properly supported and for legitimate District purposes. We selected and reviewed 25 claims, totaling $138,151, to determine if purchase orders were issued prior to the ordering of goods and services and if claims were for legitimate District purposes and audited prior to payment. The claims we tested were audited prior to payment and appeared to be for proper District purposes. We commend District officials for designing and implementing an effective system of controls over the claims auditing process.

The Department needs to improve its monitoring of the revolving loan program. Department employees did not routinely obtain information showing the number of jobs created to determine whether the loan program successfully created jobs. Also, the Department does not actively enforce the repayment of delinquent loans and does not have a process in place to determine when it is appropriate to write off “uncollectible” delinquent loans. As a result, 37 of the 65 outstanding loans (57 percent) are delinquent. These delinquent loans ranged between two and 80 months overdue. Additionally, the loan receivable balance may be overstated by $367,992 because some of the delinquent loans are not likely to be repaid. In addition, in March 2012, the Council passed a resolution to donate two tax-acquired real properties valued at $72,700 to the Oswego City Revitalization Corporation (OCRC) for use in its “Rehab and Resell” program. The unpaid property taxes for these properties amounted to $20,929, and the City expects to receive this amount after OCRC rehabs and sells the properties. There is no authority for the City to make a gift of real property, even if in furtherance of an urban renewal program. This transfer should have been made at the highest marketable price.

On June 25, 2014, the County entered into a 17.5 year lease agreement for 28,000 square feet of office space known as the Wyoming County Agriculture Business Center of Excellence (Business Center). The Business Center is intended to house various County departments and functions for a lease payment of $389,480 per year. The Board did not demonstrate that it performed an appropriate cost analysis of the selected site, or considered alternative sites or options. At the end of the 17.5 years the County has the option to purchase the building for $1, totaling a potential cost of approximately $6.8 million. As a result, we estimate that the County may pay $1.8 million more than necessary over the next 17.5 years for this building. In addition, the County's procurement policy does not provide clear guidance for procuring and awarding professional service contracts or contracts for insurance coverage. We found that for seven of the eight sampled professional service contracts reviewed, totaling $2.8 million, the County did not provide any evidence that a competitive method, such as a request for proposal, was used when soliciting these services. Further, we found that the County has used the same insurance provider for over 20 years without soliciting quotes from any other providers. Finally, the Board has not adopted comprehensive written policies and procedures to safeguard cash collected at departments even after the apparent theft of approximately $90,000 of funds from the County Department of Motor Vehicles that went undetected for over a year due to lax controls and supervisory oversight.

The Supervisor did not maintain complete, accurate and up-to-date accounting records and reports or provide adequate oversight of the bookkeeper during our audit period. The lack of oversight and the bookkeeper's failure to record all transactions in a timely manner and prepare monthly bank reconciliations caused the accounting records to be inaccurate and incomplete. As a result, the Supervisor could not provide the Board with sufficient monthly financial reports to allow it to adequately monitor and manage the Town's financial operations. The Supervisor also did not file the required 2013 and 2014 annual financial reports with the Office of the State Comptroller in a timely manner. In addition, the Board did not perform annual audits of the Supervisor's records.

District officials' overreliance on fund balance to finance operations resulted in planned operating deficits during the audit period and reduced unrestricted fund balance to approximately $200,000 (0.2 percent of the ensuing year's appropriations) as of June 30, 2014. Given the size of the District's operations, fund balance has been reduced to a dangerously low level. In addition, the District budgeted to appropriate $1.4 million of fund balance and $800,000 of reserves in the 2014-15 budget. We project that the District will use the entire amount appropriated and incur a $2.2 million operating deficit. Because the District plans to appropriate $1 million in fund balance to finance the 2015-16 budget, there will be no unrestricted fund balance remaining as of June 30, 2015. The District also lacks a multiyear financial plan for its operations and capital needs. Without a well-designed plan, it is difficult for the Board to make timely and informed decisions about the District's programs and operations.