A pattern of poor budgeting led the Brentwood Union Free School District to accumulate excessive fund balance as well as reserve funds that surpassed board-approved amounts and have gone unused, according to an audit released today by New York State Comptroller Thomas P. DiNapoli.

The audit also identified several personnel actions that ignored district policy, most notably in the search for a new superintendent.

“This audit revealed some troubling decisions made by district officials,” DiNapoli said. “The failure to adhere to district policies and best practices, whether it be when putting together the annual budget or hiring new employees, undermines the principles of transparency and accountability. Brentwood officials should take these audit findings seriously and make necessary changes”

Hiring practices

Auditors found the school board and district officials did not comply with district policy or provide justification for why it bypassed policies when hiring the new superintendent and several administrators.

For example, the board paid the Eastern Suffolk Board of Cooperative Educational Services (BOCES) approximately $7,000 to conduct a thorough search for a qualified superintendent. Instead of hiring one of the candidates BOCES recommended as having the best qualifications, the board hired a candidate that BOCES recommended be excluded.

The audit also noted that although the board’s policy requires the superintendent to recommend two candidates for each administrative position, the board did not comply with this policy when appointing the assistant superintendent for secondary education or advertising for the position of director of policy and programs. Also, district officials did not post 17 of 27 administrative positions filled during the audit period, many of which were temporary.

District officials also did not obtain required employment disclosure forms for 12 of the 20 administrators appointed during the audit period. Further, district officials did not obtain fingerprint/criminal background check clearance for six of these administrators.

Budget practices

The Comptroller’s auditors also found school officials consistently overestimated expenditures during a three-year period, resulting in an accumulation of excess fund balance.

For fiscal years 2012-13 through 2014-15, the school board appropriated a total of $60.8 million in fund balance to finance operations. The district, however, used only $5.6 million (9 percent) of the appropriated fund balance. As a result, when unused appropriated fund balance is added back, the district’s recalculated, unrestricted fund balance was between 8.2 and 9.2 percent of the ensuing year’s budget, more than twice the legal limit.

In addition, district officials could not provide board resolutions allowing them to establish five reserve funds totaling $36 million. Nor could they provide a clear purpose or intent regarding the future purpose of $4.2 million restricted in the insurance reserve. The board also overfunded the retirement contribution reserve by $4.3 million.

Auditors found that, without board authorization, officials restricted $16,157 in June of 2009; and an additional $340,240 in 2013-14 and $194,235 in 2014-15. Restricting fund balance without basis or board authorization causes available fund balance to appear to be lower than it actually is. As a result, the district withheld funds from being used.

As part of the audit, DiNapoli made a series of recommendations to Brentwood school officials. These include: 

• Adopt budgets with realistic expenditure estimates;
• Use surplus funds as a financing source for:
  • Establishing or increasing necessary reserves; 
  • Financing one-time expenditures; or 
  • Reducing property taxes.
• Discontinue the practice of adopting budgets that result in the appropriation of fund balance not needed to fund district operations;
• Update the fund balance policy to indicate the extent to which fund balance can be used, what a minimum acceptable balance is and when it is acceptable to use fund balance;
• Properly establish all reserve funds by resolution, which should include the rationale, objective and funding level for each reserve;
• Adhere to district policy when hiring candidates;
• Comply with district policy when posting job openings and appointing administrators; and
• Ensure that all employees, including retired administrators rehired on a temporary basis, complete disclosure forms and are in compliance with criminal background checks.

Brentwood school officials disagreed with several of the audit findings. Their response is included in the final report, which can be found at: http://www.osc.state.ny.us/localgov/audits/schools/2016/brentwood.htm

For access to state and local government spending and more than 50,000 state contracts, visit www.openbooknewyork.com. The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.