COMMENTARY ON COMMACK SCHOOL DISTRICT "RESPONSE" TO NYS AUDIT REPORT

Lewis Carroll could easily be the author of the Commack School District’s “Response to the NYS Comptroller’s Audit Report” (available on the CUFSD web site). In general, it is more wishful thinking than reality. In the land of Commack, not everything is as it seems. For example, the District’s Response” is not truly a response since there is no indication that it was sent to the Comptroller. If it were truly a response, it would have been published in Appendix A (Response from District Officials) of the Comptroller’s Report. But it does not appear there. This stratagem avoided any rebuttal from the Comptroller. The web site “response” is more like the money that is supposedly returned to the taxpayers, but never received. Following are some specific comments on this unofficial “Response”(The reader is also referred to the video of the Aug 6 BOE meeting which includes Trusteee J.Tampellini’s review).

• Para 1 of the “Response” states that “…we are happy to report that the audit did not find any instances of illegal activities or fraud of any kind.” This statement is baffling. Illegal activities means : not in accordance with the law. The Comptroller’s Report clearly indicates that CUFSD violated the Real Property Law in each of the three audit years (2011-12, 2012-13, 2013-14) by retaining a fund balance that was significantly greater than the allowable amount. Further, the district did not maintain adequate fuel inventory records as required,. And the Comptroller also indicated that the Board did not provide adequate oversight of the budget process – surely one of their most important functions.
• Para 1 also states that the District is audited twice annually ( by an internal and external auditor). But such audits are not relevant to the Comptroller’s audit. A disclaimer in the External Auditor’s report indicates that it comprises an audit of “Basic Financial Statements” and not of “budgetary financial information”; nor does it provide an opinion on “internal controls”.
• Para 2 of the “Response” notes that corrections have been made to the Fuel Inventory system. The Comptroller’s Report notes that district records did not account for 1826 gallons of gasoline during the 3 year audit period.
• Para 3 of the “Response” indicates that there are “philosophical differences” with the Comptroller as to budgeting practices. Based on the cover letter to the audit, the Comptroller is responsible for overseeing “district compliance with relevant statutes” and for providing “accountability for tax dollars spent to support district operations” Oversight, accountability; law is the purpose of the audit (not philosophy).
• Para 3 also states that “Further, the District returns every dollar not spent in the budget to the taxpayers…”. If that were the case, then the fund balance assigned to the budget would be fully spent each year. But, as the Comptroller noted, “…only $1.8M of the nearly $24M of appropriated fund balance was used to finance operations.”.
• Here is a gem from Para 4: “…the district has produced tax increases…saving residents significant amounts of money…”. And “There is no doubt we could do things differently…”. We can only hope that the real response, i.e. the Corrective Action Plan, will describe an effective “different “way.of doing things.
• And so forth.

An administrative report reviewing the Comptroller’s Audit was presented at the Aug 6 BOE meeting. Fiscal Stress Indicator information for 2015 was shown. It is noted that, according to the Comptroller’s pertinent web site, the Fiscal Stress system is based only on data provided by the district. Therefore, the graph has no relevance in the context of the administrative report.
Page 7 of the admin report complains that the Comptroller computed “% of overestimated expenditures” as ((budget-actual expenses)divided by actual expenses rather than divided by “budget”. The difference is minor (it would change from 5.2% to 4.93% in 2013-14). More to the point, the % computed by dividing by a significantly overestimated budget number would be misleading.

During discussion at the Aug 6 BOE meeting, it was noted that these overestimated budgets have been regularly approved by the voters. Most recently (May, 2015) the budget was approved by a vote of 1927 -575. Assume that each of the approving voters paid school taxes 0f $10,000 (a very generous assumption which discounts those who paid no tax for various reasons). Then the approvers paid a total school tax of less than $20M relative to the tax levy of $122M, that is, about 16%. So the decision to approve the inflated budgets and increase taxes on the community was made by less than 16% of the tax payers. Hopefully, the silent majority in the land of Commack will be more representative in 2016 and beyond.