The Board needs to improve its oversight of District financial activities. The Board did not ensure that complete accounting records were maintained and monthly and annual financial reports were prepared. In addition, the Board did not follow the statutory requirements with regard to adopting the 2014 budget and computing the tax levy limit. It also has not adopted a code of ethics, procurement policy or an investment policy. Finally, the Board did not conduct a thorough audit of claims before they were paid.

The Board did not effectively manage the Village's financial condition. The Board did not develop sound revenue budget estimates; it also failed to increase water and sewer rates, which drive the revenues in these funds. As a result, water and sewer revenues were overestimated by an average of 25 percent and 21 percent, respectively, which caused fund balance to decrease significantly in both funds from fiscal years 2009-10 through 2011-12. Unplanned operating deficits caused both the water and sewer funds to have a deficit fund balance. Over a four-year period, the deficit fund balance in the water fund grew by a total of $61,274, or 51 percent, while the sewer fund balance declined by a total of $42,974, or 132 percent. Although both funds had an operating surplus in the 2012-13 fiscal year, the funds still ended the year with deficit fund balances of $181,522 in the water fund and $10,424 in the sewer fund. The Village's general fund loaned moneys to these funds to offset the funds' deficit balances. Furthermore, the poor financial condition of the water and sewer funds has negatively impacted the cash flow of the Village's general fund.

The Board and Library Board have not adopted cash receipts policies requiring internal control procedures to be established and implemented. We identified weaknesses in the cash collection procedures at the Recreation Department, Clerk's office, Highway Department and Library. Management and employees developed cash collection procedures that were not consistent with good internal control practices, resulting in errors recording and reporting cash receipts without management questioning the errors or re-evaluating procedures. We also found that neither the Board nor Library Board audited and approved claims for payment. Instead, the Treasurer and his staff audited all claims against the Village and the Library. Checks were signed electronically using a single signature file containing facsimile signatures of the Mayor and a Village Trustee, with neither the Mayor nor the Trustee retaining custody of the signature file or being present during the affixing of the signatures. This arrangement is not in compliance with the law and allowed claims to be paid without a proper audit.

The Board did not properly monitor and manage the Village's financial condition. As a result, fund balance for all three major funds (general, water and sewer) decreased significantly from 2008-09 to 2011-12 due to operating deficits caused primarily by poor budgeting which resulted in revenue shortfalls and overspent appropriations. For example, the fund balance of the general fund dropped from $927,214 in fiscal year 2008-09 to a deficit of $39,827 at the end of the 2010-11 fiscal year before showing some improvement in the 2011-12 fiscal year. The Board also relied on fund balance and interfund loans to fund recurring operating expenditures. The Board also did not adequately monitor the budget and allowed appropriations to be overexpended for many line items and in total for the general fund budget. General fund appropriations were overexpended by $143,908 in 2011-12, $197,420 in 2010-11 and $313,832 in 2008-09. Although the 2009-10 budget was not overspent in total, several individual line items were overspent. The lack of monitoring also caused expenditures to consistently exceed appropriations in the water and sewer funds. Finally, the Board has not developed comprehensive, multiyear financial and capital plans to improve the budget development process.

The Board did not ensure that competition was sought when procuring goods and services not subject to bidding. Although District officials have adopted a procurement policy that addresses procurement below the bidding thresholds, the policy states that professional services do not lend themselves to competitive procurement procedures. Therefore, District officials did not solicit competition for eight of the nine professional service contracts we reviewed, which totaled $288,276. Furthermore, District officials did not enforce the policy requirement that quotes be solicited for purchases below the competitive bidding thresholds.

In recent years, the District has struggled with fiscal challenges and deteriorating financial condition. We found that the Board adopted budgets that limited tax increases by balancing its budgets with appropriations of fund balance and reserves. As a result, by the end of the 2012-13 fiscal year, the District had approximately $2 million remaining in reserves, and unexpended surplus funds of $461,000. We reviewed budget-to-actual results for fiscal years 2010-11 through 2012-13 and found that District officials adopted realistic budgets and kept expenditures within budgeted appropriations. The Board reviewed budget-to-actual comparison reports throughout the year to monitor the budget and approved budget transfers at the monthly Board meetings. We commend District officials for their continuous efforts in closely monitoring financial operations and evaluating numerous options to close the District's budget gaps. However, the heavy reliance on appropriated fund balance and reserves as financing sources in the annual budgets has resulted in a significant reduction in the District's unexpended surplus funds and reserve balances.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Village's proposed budget includes a tax levy which exceeds the allowable property tax levy limit. Therefore, to comply with the Law, the Board must adopt a local law overriding the tax levy limit before they adopt the proposed budget.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The District's proposed budget complies with the property tax levy limit.

The Board and College officials did not provide adequate oversight of the College's financial operations to ensure that College assets were adequately safeguarded. The Bursar's Office did not grant tuition waivers in accordance with the provisions of the College's collective bargaining agreements. Of the 97 waivers granted during the 2012-13 fiscal year, the Bursar's Office granted 43 waivers (approximately 45 percent) totaling $54,364 to individuals that were not eligible, resulting in lost revenue to the College in the same amount. We also found that some students were overbilled and/or underbilled for services received; adjustments were made to student accounts without approval; student refund checks were printed and disbursed without approval; and the timing of methods used to enforce delinquent student accounts were not consistent from one semester to the next. In addition, College officials have not properly limited users' access within the student management system and the system allowed for the ability to delete receipts and then issue the same receipt number a second time for a different transaction. Finally, we found that College officials did not solicit quotes for 15 purchases totaling $99,584 and the College paid $376,415 to eight professional service providers without soliciting competition. In addition, neither the Board nor any College official performed a proper audit of claims, resulting in the College paying credit card charges totaling $11,798 without sufficient documentation of the purchases that were made and $223,873 in payments being made to three professional service providers without written contracts.

We found that the Clerk did not number claims or prepare abstracts of claims to be approved by the Board for payment by the Supervisor. Only the total amount of claims approved by the Board for payment was included in the Board minutes. We found that the amounts in the minutes did not agree with the total amounts of the approved claims for two of the four months we reviewed. For example, the February 2012 Board minutes indicated that the amount of claims approved for payment was $9,630 more than the claims filed with the Clerk. Conversely, the February 2013 Board minutes indicated that the amount of claims approved for payment was $1,128 less than the claims filed with the Clerk. The Clerk stated that she may have calculated the totals incorrectly before entering the amounts in the minutes.

The Board did not develop policies and procedures for budget preparation and monitoring and, as a result, repeatedly adopted budgets with inaccurate estimates for revenues, expenditures and appropriated fund balance. In the town-wide (TW) general fund, the overestimation of expenditures and underestimation of revenues created a positive budget variance of nearly $568,000 over five years. At the 2012 fiscal year end, the unrestricted fund balance amounted to 48 percent of the Town's general-fund expenditures for that year. Similarly, the 2012 year-end unrestricted fund balance in the town-outside-village (TOV) general fund amounted to 68 percent of the year's expenditures; and in the TOV highway fund, to 34 percent. These excess funds are considerably more than reasonably necessary for a financial cushion. Additionally, the Board did not appropriately allocate the Deputy Highway Superintendent's compensation, placing an inequitable burden on TW taxpayers. We also found that the Board did not establish sufficient controls over payroll records and leave time. Employees did not keep daily time records of regular and overtime hours worked or leave time used, and did not formally request leave time usage. Thus, payroll reports did not include leave time usage and inaccurately reported all paid hours as hours worked. In addition, the Highway Superintendent's sick leave accumulation surpassed the maximum by 64 days with leave time credited for 2013.

The Board and Town officials were aware of revenue shortfalls in the water district fund, but did not take appropriate action to align estimated revenues in the adopted budgets with actual rate schedules. This resulted in an accumulated operating deficit totaling more than $14,000 from fiscal years 2011 through 2013 and, ultimately, a $4,000 deficit fund balance estimated as of December 31, 2013. Furthermore, the water district fund owed the general fund a cumulative balance of $66,388 as of December 31, 2013. The Board continued its inaccurate budgeting practices with the 2014 budget, which makes it unlikely that the water district fund will be able to begin to repay the general fund or improve its financial condition. We also identified weaknesses in the Justice Court's internal controls over financial operations. There was no documentation indicating that monthly bank reconciliations or accountabilities had been performed, and neither Justice reconciled their bail accounts. Furthermore, computerized records for bail were not accurate for Justice Mackey as well as three former Justices. Also, the former Justices' open case files within the computer system had not been properly transferred to the current Justices. Finally, the Board did not perform an annual audit of the Justices' books and records.

The Library retained excessive fund balance in each of the fiscal years 2006-07 through 2011-12 by as much as $2,435,455, which was 71 percent of the ensuing year's appropriations. For the fiscal years ended June 30, 2008 through June 30, 2012, Library officials increased unexpended surplus fund balance from $323,014 to $1,123,014, yet did not expend any of these funds during that period. Library officials have not communicated these surplus funds to taxpayers. Library officials have also maintained a capital projects fund despite having no current capital projects in place and no planned capital projects in the near future. In addition, using moneys from this fund, they purchased items that appear to be day-to-day expenditures that should have been paid from the general fund. Finally, Board members did not receive or request adequate financial information from the Director; as a result, the Board is not adequately informed of the Library's fiscal affairs.

The unexpended surplus funds in the Village's general fund increased nearly $200,000 (45 percent) over the past five years to almost $640,000 as of May 31, 2013. As a result, the general fund's unexpended surplus funds in 2012-13 reached 182 percent of next year's appropriations. Unexpended surplus funds increased from 2008-09 through 2012-13 despite the Board adopting budgets that indicated that the Board planned to use some of the fund balance to partially fund operations. Village budgets included planned operating deficits in each of these years. However, from 2008-09 through 2012-13 Village operations generated a combined operating surplus totaling more than $187,000, eliminating any need for using appropriated fund balance except in 2011-12.

District officials did not verify that all non-original equipment manufacturer (OEM) school bus options were consistent with State contract pricing for the 16 school buses they purchased in 2012-13 and 2013-14. District officials did not obtain the State contract list price books, apply the appropriate contract discounts or compare the resultant prices with the invoice prices. As a result, they overpaid by $12,080 for two non-OEM options (rust proofing and heaters) installed on 12 of the buses. In addition, the Board did not properly plan for the use of reserve funds. As of June 30, 2013, the District had seven reserve funds with balances totaling $5 million. We analyzed these reserves for reasonableness and adherence to statutory requirements, and found the balances of five of the reserves appeared to be reasonable. However, the balances of two reserves (the unemployment insurance and tax reduction reserves) with balances totaling approximately $2.2 million appeared higher than necessary to fund costs that may be legally paid from these reserves.

The Board needs to improve its oversight and management of the District's budget. Over the last four fiscal years, the District's conservative budgeting practices resulted in operating surpluses that totaled approximately $164,000. To reduce fund balance, the Board appropriated unexpended surplus funds each year, for a four-year total of nearly $1.3 million, to help finance the ensuing year's operations. However, because of the District's surpluses, approximately $1 million of the fund balance appropriations over the four years went unused. As a result, the District accumulated unexpended surplus funds equivalent to 11 percent of the ensuing years' budgets, or nearly three times the amount allowed by law. Further, we found that the amount retained in the District's retirement contribution reserve is excessive and the District made retirement payments out of the general fund rather than the reserve fund. The Board also improperly appointed its President, in place of the Treasurer, as the sole signatory on District checks under $5,000, with its Vice President as co-signor for all District checks over $5,000. This Board action allowed one of its members to, in effect, also act as Treasurer for the purpose of disbursing District funds, which is prohibited by Education Law. Finally, the Board has not developed and adopted policies, including a disaster recovery plan and a breach notification policy, to ensure the District's electronic data is adequately safeguarded.

We found that the Board and District officials did not adopt and implement appropriate policies and procedures for the extra-classroom activity fund. As a result, the Board did not receive monthly extra-classroom activity fund records during the audit period. In October 2013, subsequent to the start of our fieldwork, the central treasurer started providing the Board with extra-classroom activity fund records. In addition, the student treasurers lacked sufficient documentation/accounting records for collections totaling $23,676, such as profit and loss statements, up-to-date activity ledgers or inventory control forms. The central treasurer did not provide the student treasurers with duplicate receipts for remittances from the various clubs totaling $23,676. Further, of these funds, there was insufficient documentation supporting $22,491 collected by the student treasurers to determine if the cash and checks collected were remitted timely to the central treasurer.

The Board did not adopt reasonable budgets and adequately manage the District's financial condition. The Board continually overestimated appropriations for the last three years causing the District to exceed the 4 percent statutory limit each year with the District's unassigned fund balance reaching $1,334,486 as of June 30, 2015, or 10.7 percent of the ensuing year's appropriations. Although the Board appropriated fund balance each year, the adopted budgets actually produced operating surpluses. As a result, none of the appropriated fund balance was used. When the unused appropriated fund balance was added back, the recalculated unassigned fund balance reached $2,034,486 or 16.4 percent of the ensuing year's appropriations. In addition, the District maintained a total of $565,000 in three reserve funds but had no plan for their use. The tax certiorari reserve is overfunded by as much as $145,000 (96 percent). Lastly, officials did not adopt a multiyear financial or capital plan.

The Board did not implement adequate controls over the Department's financial activities, develop adequate policies and procedures, or adopt a code of ethics. The by-laws do not include any detailed financial procedures that would adequately segregate the duties of day-to-day financial operations. As a result, the Treasurer and Lottery Account Clerk perform all their financial duties with little oversight. We also found that as of November 2013 the Treasurer had not recorded the monthly lottery transactions since February 2013. Further, although all Department checks require two signatures, there is no evidence that the Board was consistently auditing the prior month's receipts, disbursements, account balances, bank statements and other records as required by the by-laws. There was also no evidence that the Board consistently reported the results of the audits in June and December to the Department members.

We found that the Board provides adequate oversight of District financial activities. The Board has adopted policies addressing ethics, procurement, travel and credit card use. The Treasurer provides the Board with monthly financial reports including cash balance and budget status reports. The Treasurer submitted the 2012 required annual financial report of the District's financial condition to the Office of the State Comptroller in a timely manner. The Board has contracted for an annual independent audit of District financial operations each year, as required. The Secretary completes claim forms and prepares voucher packages and submits them to the Board for audit and approval. The Board's process for auditing claims prior to payment includes reviewing all supporting documentation, including quotes obtained in accordance with the District's purchasing policy. Once audited and approved for payment by the Board, the claim packages are submitted to the Treasurer for payment. Except for minor issues that were discussed with District officials, the transactions were properly authorized and recorded in the accounting records and appeared to be for District purposes.