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YONKERS---Weak internal financial controls in the Yonkers City School District led to excess overtime payments, salaries that were higher than authorized, and impermissible sick leave payments to some school district employees as well as other accounting problems, according to an audit issued Thursday by the state comptroller's office.
Auditors found:
--A total of $692,648 in overtime payments to 162 employees exceeded districts caps or violated other policies on overtime pay.
--Starting salaries for four employees were inflated by giving them more credit for service in other school districts than was allowed, for a total of $134,840.
--Five employees received a total of $35,090 in payments from a "sick bank" of donated sick time, even though they were receiving Workers' Compensation and were therefore ineligible to draw from the sick bank.
--Eight contracts for professional services valued at a total of $742,722 were awarded without requests for proposals or other formal, documented processes.
School district revenues were not remitted to the Yonkers city cashier in a timely manner, with more than $927,000 not remitted for a month or longer.
--$154.7 million in payments were processed during the audit period without proper pre-payment auditing, as required under State education law.
Salary and Overtime Overpayments
According to Yonkers school policies, overtime earnings for all staff are limited to $5,000, $10,000 and $12,000 per year for hourly, 10-month and 12-month employees, respectively. In the 2004-2005 school year, the district paid a total of about $9 million in overtime, and auditors found that $692,648 (8 percent) was paid contrary to district policy.
Two school nurses earned $21,935 and $22,907 in overtime pay, both greatly exceeding the $12,000 annual cap. A school administrator was paid $27,758 in overtime, also far above the cap, for a total of 712 hours of overtime. Auditors noted that this individual's overtime sheets did not show the time of day that the overtime was worked, and found 18 instances when she claimed to have worked an unreasonably high number of overtime hours on the same day. Two administrators at School 13 earned a total of $13,382 in overtime for working at the same site at the same time, a violation of school policy stating that no more than one administrator will be paid overtime for programs occurring a the same time in the same building.
Another school district policy allows newly-hired teachers and administrators to receive up to 10 years of credit for previous service and experience in other school districts. This service credit allows the new employees to start at higher salaries in Yonkers. Auditors found that three employees received more than the allowed ten years credit and therefore received starting salaries that were higher than they should have been, leading to a total overpayment of $51,354 from November 2000 through June 2005. Auditors also found that the district's physician-coordinator received a salary of $159,361, but the correct base salary for this position was $75,875 - less than half of the salary actually paid to this individual - an overpayment of $83,486.
The Yonkers school district has a "sick bank" that allows employees to contribute unused sick leave time for use by other employees who have exhausted their sick leave. Employees who are receiving Workers' Compensation payments are not eligible to draw from the sick bank, but auditors determined that, due to lack of internal controls, five employees collecting such payments were allowed to draw leave time from the sick bank valued at a total of $35,090.
No-Bid Contracts
For purchases of good and services that are not made through competitive bidding, State law generally requires school districts to have written policies and procedures for use of request for proposals (RFP), or written or verbal price quotations. Auditors found that the Yonkers school district awards professional service contracts at the discretion of the school superintendent with board approval and awarded eight contracts valued at a total of $742,722 without RFPs or any other documented process. While auditors did not identify any irregularities with the individual contracts, they noted that the district may have missed cost-saving opportunities on these procurements.
Revenues Not Handled in a Timely Manner
All revenues received by the school district are remitted to the Yonkers city cashier. Auditors analyzed 48 checks totaling more than $4.8 million and found that 39 percent of the checks - valued at $927,334 - were not remitted to the city cashier for a month or longer. Only six (12.5 percent) of the 48 checks were remitted within one week or less. Auditors noted that cash and checks should be deposited as quickly as possible to prevent any loss or misuse of revenues, that delays in making such remittances can lead to misrepresentations of district cash flow and reduce the income earned from interest paid for cash on hand.
Inadequate Internal Controls over Accounts Payable
According to State education law, school district payments for goods and services are to be made only after they have been audited to ensure that they are accurate and appropriate. Yonkers school district purchasing department employees approved invoices for payment and accounts payable clerks reviewed invoices and related documentation, but auditors noted that these transactions should also be reviewed by an independent claims auditor in order to prevent inappropriate or excessive payments.
Auditors identified a total of $154.7 million in payments were processed without proper auditing. However, when auditors tested these payments, they found no inappropriate or excessive payments.
The audit covered the period from July 1, 2004 through Jan. 31, 2006. Yonkers school officials generally agreed with auditors' recommendations for strengthening internal financial controls, and some new policies were put in place while the audit was still underway. The complete response is included in the audit report.
The Yonkers City School District encompasses 40 schools with approximately 25,000 students and 4,500 employees. The district is the fifth largest in the state, and has an annual budget of $368.8 million.
Click here for a copy of the audit. 11-16-06
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© 2006 North
Country Gazette
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