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Corning City School District

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					OFFICE   OF THE   NEW YORK STATE COMPTROLLER
                  D IVISION OF LOCAL GOVERNMENT
                      & SCHOOL ACCOUNTABILITY




          Corning
    City School District
    Internal Controls Over
Selected Financial Operations
           Report of Examination
                   Period Covered:
          July 1, 2006 — September 12, 2007
                      2009M-29




               Thomas P. DiNapoli
                                Table of Contents



                                                                                Page

AUTHORITY LETTER                                                                 2


EXECUTIVE SUMMARY                                                                3


INTRODUCTION                                                                     6
           Background                                                            6
           Objective                                                             7
           Scope and Methodology                                                 7
           Comments of District Officials and Corrective Action                   7


MEDICAID REIMBURSEMENT                                                           9
            Medicaid Eligibility                                                10
            Claims Processing                                                   12
            Recommendations                                                     14


PROCUREMENT                                                                     16
          Professional Service Contracts                                        16
          Transportation Contracts                                              17
          Credit and Procurement Cards                                          19
          Recommendations                                                       21


CELLULAR PHONES                                                                 23
           Policy                                                               23
           Inventory                                                            24
           Recommendations                                                      25



APPENDIX    A   Response From District Officials                                 26
APPENDIX    B   Audit Methodology and Standards                                 30
APPENDIX    C   How to Obtain Additional Copies of the Report                   33
APPENDIX    D   Local Regional Office Listing                                    34


                       DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY          1
                                                                                       1
                                                 State of New York
                                    Office of the State Comptroller


Division of Local Government
and School Accountability

August 2009

Dear School District Officials:

A top priority of the Office of the State Comptroller is to help school district officials manage their
districts efficiently and effectively and, by so doing, provide accountability for tax dollars spent to
support district operations. The Comptroller oversees the fiscal affairs of districts statewide, as well
as districts’ compliance with relevant statutes and observance of good business practices. This fiscal
oversight is accomplished through our audits, which identify opportunities for improving district
operations and Board of Education governance. Audits also can identify strategies to reduce district
costs and to strengthen controls intended to safeguard district assets.

Following is a report of our audit of the Corning City School District, entitled Internal Controls over
Selected Financial Operations. This audit was conducted pursuant to the State Comptroller’s authority
as set forth in Article V, Section 1 of the State Constitution, and Article 3 of the General Municipal
Law.

This audit’s results and recommendations are resources for district officials to use in effectively
managing operations and in meeting the expectations of their constituents. If you have questions about
this report, please feel free to contact the local regional office for your county, as listed at the end of
this report.

Respectfully submitted,


Office of the State Comptroller
Division of Local Government
and School Accountability




   2         OFFICE OF THE NEW YORK STATE COMPTROLLER
                                                                  State of New York
                                                     Office of the State Comptroller
                                                       EXECUTIVE SUMMARY

The Corning City School District (District) is governed by the Board of Education (Board) which
comprises nine elected members. The Board is responsible for the general management and control of
the District’s financial and educational affairs. The Superintendent of Schools (Superintendent) is the
chief executive officer of the District and is responsible, along with other administrative staff, for the
day-to-day management of the District under the direction of the Board.

There are 12 schools and an Early Childhood Education Center in operation within the District, with
approximately 5,700 students in grades Pre-K through 12 and approximately 1,000 employees. The
District's 2006-07 operating expenditures and inter-fund transfers totaled $73.7 million for the general
fund and $4.6 million for the Special Aid Fund, which were funded primarily with State and Federal
aid, real property taxes, and grants.

The District’s pupil transportation costs exceeded $4 million dollars for the 2006-07 fiscal year. The
District encompasses a 237-square-mile area. The District transports approximately 4,000 students
more than 5,600 miles each day, for a total of more than 1 million miles annually using both District
vehicles and contracted transportation.

The District, like other school districts statewide, is able to obtain partial Federal reimbursement for
many special education services provided to Medicaid-eligible students by submitting periodic claims
to the New York State Department of Health documenting the services provided. Claims must be
supported by documentation of the services delivered to students, and submitted within two years of
the date that services were provided. School districts receive Federal reimbursements of approximately
50 percent of the approved claim amounts; however, 25 percent of the reimbursement is deducted from
future State aid payments.

Scope and Objective

The objective of our audit was to examine internal controls over selected District financial operations
for the period July 1, 2006 through September 12, 2007. Our audit addressed the following related
questions:

   •   Is the District claiming all of the Medicaid reimbursement to which it is entitled for services
       provided to eligible special education students?

   •   Are internal controls over the procurement process appropriately designed and operating
       effectively to adequately safeguard District assets?



                           DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                   3
                                                                                                    3
      •   Are internal controls over cellular phones appropriately designed and operating effectively to
          adequately safeguard District assets?

Audit Results

We found instances where District officials had either not established internal controls or controls
that had been established were not implemented and operating effectively. As a result, the District
is vulnerable to the possibility of errors and/or irregularities occurring and not being detected in a
timely manner. For example, District officials did not claim approximately $562,000 in Medicaid
reimbursement to which it was entitled because the District lacked policies and procedures to define
the responsibilities for collecting data and documentation, submitting and reconciling claims, and
monitoring the Medicaid reimbursement process for IEP services, Targeted Case Management (TCM),
and Ongoing Service Coordination. In addition to the almost $562,000 in potentially lost revenue for
the District, New York State also lost over $562,000 in reimbursement.

We found that the District’s purchasing policy and procedures did not address the process for obtaining
professional services. As a result, District officials paid $527,730 to 16 professional service vendors
for consulting, legal and training services without using RFPs. Finally, the policy and procedures were
not distributed to employees. As a result, District officials and employees made purchases that did not
follow the District’s purchasing policy. Therefore, the District risks acquiring goods and services at
higher costs than necessary.

During the 2006-07 fiscal year, the District spent over $4.4 million on pupil transportation, of which
$2.7 million1 (64 percent) was paid to private transportation contractors. However, the District paid
the private transportation contractors $304,200 (13 percent) more than was allowed by the approved
contract extensions. District officials have continually applied for extensions of the original contracts
from the New York State Education Department (SED), without reviewing the District’s current
transportation needs, which have materially changed.

The Board adopted a policy to govern the use of credit and procurement cards. The policy requires
that the Business Office maintain a list of all individuals who have been issued District credit and
procurement cards. District officials did not maintain this list. District officials estimated that they
had a total of five credit cards and 20 procurement cards in use. However, we determined the District
actually had seven credit cards and 143 procurement cards. District officials and employees charged
$67,851 on the credit cards. They also used vendor procurement cards for purchases at a local grocery
store ($19,482) and at a home improvement store ($10,451). Further, we found no evidence that
the Business Manager monitored the use of credit cards as required by the policy. As a result, the
opportunity for unauthorized, unnecessary, or inappropriate purchases is increased.

Although the District adopted a cellular phone policy, it was inadequate because it did not specifically
identify the authorized users and plans or how to determine which phone calls were personal or
business-related. In addition, we found that District officials did not monitor cellular phone use based
on the guidelines of the established policy. The District paid $5,835 for 36 cellular phones that were
rarely used during the 2006-07 fiscal year. In addition, we determined that 9,444 (36 percent) of the
minutes charged during our one-month test period were potential personal calls.2 As a result, the
1
    This amount does not include the cost of fuel provided to the private transportation contractors.
2
    19 percent weekend and holiday minutes, 16 percent evening minutes and 2 percent outside of New York State minutes

     4          OFFICE OF THE NEW YORK STATE COMPTROLLER
District may be paying more than necessary for cellular phones, and may be paying for personal
phone calls. Finally, the District had no complete, up-to-date list of users. As a result, we attempted to
locate 21 cellular phones, but were unable to locate 11 (52 percent) of the cellular phones. Without a
complete and up-to-date list of authorized users and cellular phones, it becomes difficult or impossible
to assign responsibility when phones cannot be located.

Comments of District Officials

The results of our audit and recommendations have been discussed with District officials and their
comments, which appear in Appendix A, have been considered in preparing this report. District
officials generally agreed with the recommendations and have begun to take corrective action.




                           DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                    5
                                                                                                     5
                                  Introduction
Background               The Corning City School District (District) is located in the Towns
                         of Bradford, Campbell, Caton, Corning, Erwin, Hornby, and Lindley
                         and the City of Corning in Steuben County, the Towns of Big Flats,
                         Catlin, and Southport in Chemung County, and the Towns of Dix and
                         Orange in Schuyler County. The District is governed by the Board
                         of Education (Board) which comprises nine elected members. The
                         Board is responsible for the general management and control of the
                         District’s financial and educational affairs. The Superintendent of
                         Schools (Superintendent) is the chief executive officer of the District
                         and is responsible, along with other administrative staff, for the day-
                         to-day management of the District under the direction of the Board.
                         In July 2007, the Superintendent gave notice of her retirement to
                         be effective October 1, 2007. The Assistant Superintendent for
                         Instruction was named by the Board to serve as Acting Superintendent
                         until the search for a new Superintendent could be completed. In
                         December 2007 the Board appointed the Acting Superintendent as
                         the new Superintendent.

                         There are 12 schools and an Early Childhood Education Center in
                         operation within the District, with approximately 5,700 students in
                         grades Pre-K through 12 and approximately 1,000 employees. The
                         District's 2006-07 operating expenditures and inter-fund transfers
                         totaled $73.7 million for the general fund and $4.6 million for the
                         Special Aid Fund, which were funded primarily with State and
                         Federal aid, real property taxes, and grants.

                         The District’s Business Service Office staff consists of the Deputy
                         Superintendent for Administrative Services,3 Treasurer, Deputy
                         Treasurer, two accounts payable clerks, two senior payroll account
                         clerks, and beginning with the 2007-08 fiscal year a School
                         Business Official. The staff maintains the financial records using an
                         accounting software package. The former Deputy Superintendent for
                         Administrative Services served as, and the current School Business
                         Official serves as, the purchasing agent.

                         The District encompasses a 237-square-mile area. The District
                         transports approximately 4,000 students more than 5,600 miles
                         each day, for a total of more than one million miles annually using
                         District vehicles and contracted transportation. The District’s pupil
                         transportation costs exceeded $4 million dollars for the 2006-07
                         fiscal year. The former Director of Transportation retired at the end

                         3
                            Upon his retirement at the end of the 2006-07 fiscal year, this position was re-
                         titled to Assistant Superintendent for Administrative Services.

  6      OFFICE OF THE NEW YORK STATE COMPTROLLER
                               of the 2006-07 fiscal year. Another employee was promoted to serve
                               as the acting Director of Transportation until a civil service list could
                               be established.

                               The District, like other school districts statewide, is able to obtain
                               partial Federal reimbursement for many special education services
                               provided to Medicaid-eligible students by submitting periodic
                               claims to the New York State Department of Health documenting
                               the services provided. Claims must be supported by documentation
                               of the services provided to students, and submitted within two
                               years of the date of services were provided. School districts receive
                               Federal reimbursements of approximately 50 percent of the approved
                               claim amounts. Because the State is due one-half of the Medicaid
                               reimbursements (25 percent of the approved claim) sent to the districts,
                               the State withholds its share from the districts’ future State aid. The
                               current Director of Pupil Personnel Services became responsible for
                               submitting Medicaid reimbursement claims on September 1, 2006.

Objective                      The objective of our audit was to examine internal controls over
                               selected District financial operations. Our audit addressed the
                               following related questions:

                                  •   Is the District claiming all the Medicaid reimbursement to
                                      which it is entitled for services provided to eligible special
                                      education students?

                                  •   Are internal controls over the procurement process
                                      appropriately designed and operating effectively to adequately
                                      safeguard District assets?

                                  •   Are internal controls over cellular phones appropriately
                                      designed and operating effectively to adequately safeguard
                                      District assets?

Scope and                      We examined the District’s internal controls over Medicaid
Methodology                    reimbursements, procurement, and cellular phones for the period of
                               July 1, 2006 to September 12, 2007.

                               We conducted our audit in accordance with generally accepted
                               government auditing standards (GAGAS). More information on such
                               standards and the methodology used in performing this audit are
                               included in Appendix B of this report.

Comments of District           The results of our audit and recommendations have been discussed
Officials and Corrective        with District officials and their comments, which appear in Appendix
Action                         A, have been considered in preparing this report. District officials


                          DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                   7
                                                                                                   7
                    generally agreed with the recommendations and have begun to take
                    corrective action.


                    The Board has the responsibility to initiate corrective action.
                    Pursuant to Section 35 of the General Municipal Law, Section 2116-
                    a (3)(c) of the Education Law and Section 170.12 of the Regulations
                    of the Commissioner of Education, a written corrective action plan
                    (CAP) that addresses the findings and recommendations in this report
                    must be prepared and provided to our office within 90 days, with a
                    copy forwarded to the Commissioner of Education. To the extent
                    practicable, implementation of the CAP must begin by the end of
                    the next fiscal year. For more information on preparing and filing
                    your CAP, please refer to our brochure, Responding to an OSC Audit
                    Report, which you received with the draft audit report. The Board
                    should make the CAP available for public review in the District
                    Clerk’s office.




8   OFFICE OF THE NEW YORK STATE COMPTROLLER
   Medicaid Reimbursement

     The Medicare Catastrophic Act of 1988 made it possible for school
     districts to obtain partial Medicaid reimbursement for many special
     education services that they provide to Medicaid-eligible students.
     The State Education Department (SED) and the Department of
     Health (DOH) jointly established the School Supportive Health
     Services Program (SSHSP) to help school districts obtain Medicaid
     reimbursement for diagnostic and health support services4 provided
     to eligible students with individual education plans (IEPs), and for
     case management review, which includes coordinating medical and
     non-medical procedures for students.

     To administer the SSHSP, DOH has developed a monthly fee
     schedule for reimbursable services. Using the fee schedule, districts
     can submit claims to Medicaid for the gross amounts eligible for
     reimbursement. Districts must ensure claims are supported by
     documentation of the services provided to students, and submit the
     claims within two years of the date services were provided. The
     districts receive Federal reimbursements of approximately 50 percent
     of the approved claim amounts. Because the State is due one-half
     of the Medicaid reimbursements (25 percent of the approved claim)
     sent to the districts, the State withholds its share from the districts’
     future State aid. To ensure all services were reimbursed, it is
     essential that district officials reconcile their submitted claims to the
     reimbursement received, and review disallowed amounts to identify
     claims that can be resubmitted.

     As districts struggle to fund educational programs with limited
     resources, Medicaid reimbursements for services provided to eligible
     special education students are an important potential revenue source.
     We found that the District lacked policies and procedures to define
     the responsibilities for collecting data and documentation, submitting
     and reconciling claims, and monitoring the reimbursement process.
     As a result, we estimate that the District did not claim approximately
     $562,000 in Medicaid reimbursements for IEP services, Targeted
     Case Management (TCM), and Ongoing Service Coordination to
     which it was entitled, as follows:




     4
       Reimbursable services include physical and occupational therapy, speech therapy,
     psychological counseling, skilled nursing services, basic and comprehensive
     psychological evaluations, medical evaluations, medical specialist evaluations,
     audiological evaluations and transportation.

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                           9
                                                                                 9
      Medicaid                Sample of Eligible          Sample of Eligible            Sample of Students
Reimbursement Revenue       Students Identified by       Students Not Identified         Receiving IEP Services
                                  District                   by District                 and Free Lunches
IEP Services                               $ 10,999                     $ 23,070                       $ 6,043
TCM                                        $ 2,450                      $ 2,850                       $ 2,008
Ongoing Service
Coordination                                 $ 3,625                       $ 6,400                       $ 3,500
            Sample Totals                   $ 17,074                       $ 32,320                      $ 11,551
Extension of Sample
Error Rate to Respective
Populations                                $357,058                        $ 63,851                      $ 79,984
Total Potential
Reimbursement                              $374,132                         $96,171                          $91,535
Grand Total (Eligible
and Potentially Eligible
Students)                                                                                                $561,838

    Medicaid Eligibility         Good policies and procedures over the process for claiming
                                 reimbursements are essential for districts to obtain the Medicaid
                                 revenues due to them. The process starts when the districts provide
                                 SED with demographic information for every student referred to the
                                 districts’ Committees for Special Education (CSE), including name,
                                 address, birth date, and gender. This list of referred students becomes
                                 each district’s “classified student list.” The demographic information
                                 is matched against Medicaid-assistance files maintained by DOH to
                                 identify Medicaid-eligible students in public school districts located
                                 outside of New York City.

                                 To identify which special education services are reimbursable, district
                                 officials must regularly compare the Medicaid-eligible lists with the
                                 classified student lists generated by the annual CSE meetings in each
                                 district. By matching the two lists, district officials can produce a list
                                 of Medicaid-eligible classified students, which identifies the students
                                 whose services are reimbursable. Using this information, district
                                 officials can then provide a customized list of Medicaid-eligible
                                 classified students to each provider of “related services” that is
                                 responsible for submitting documentation. Providers must regularly
                                 submit appropriate documentation of the services they provide to
                                 the designated district departments. District officials need to verify
                                 the accuracy of the documentation before preparing reimbursement
                                 claims. Finally, as an added control, it is important that district
                                 officials reconcile their claims to the reimbursements when they are
                                 received to ensure that all items are paid. Officials can then review
                                 any rejected or disallowed amounts to determine whether the district
                                 should resubmit the items for reimbursement.


      10       OFFICE OF THE NEW YORK STATE COMPTROLLER
     District officials are responsible for ensuring all Medicaid-eligible
     students, who have an IEP, are identified and that these students’
     eligible service claims are submitted to Medicaid for reimbursement.
     District officials identified 331 Medicaid eligible students with IEPs.
     However, we found that District officials did not identify all of their
     Medicaid-eligible IEP students. We compared the Greater Southern
     Tier (GST) BOCES5 prepared list of Medicaid-eligible students
     against the District’s prepared list of students with IEPs and identified
     an additional 84 Medicaid-eligible IEP students. Consequently, the
     services for these 84 students were not submitted for Medicaid
     reimbursement.

     We reviewed the case records for 27 (32 percent) of the additional
     84 Medicaid-eligible students with IEPs and determined the District
     failed to submit claims totaling $129,278 for related services,
     targeted case management (TCM) reviews and ongoing service
     coordination provided to the students. As a result, the District could
     have received $32,3206 in additional Medicaid reimbursement. If
     the same rate of services were provided to the other 57 students,
     we estimate the District failed to process and submit claims totaling
     $255,402, which would have resulted in $63,851 in additional
     Medicaid reimbursement. Therefore, the District and State each lost
     over $96,171 in Medicaid reimbursement revenues.

     We also found that the District provided approximately 1,550
     students with free lunches and that 120 of these students had an
     IEP, but were not listed on the Medicaid-eligible list prepared by the
     BOCES. We reviewed the student files for 15 (12.5 percent) of the
     120 students with IEPs who received a free lunch. We reviewed their
     free lunch applications and determined the average monthly income
     was $1,4807 per family of four. Because these students appear to
     meet both the income8 and disabilities requirements for Medicaid,
     the IEP-related services provided to these students may have been
     eligible for reimbursement if they had applied for Medicaid. We
     determined the 15 students had claims totaling $46,205 for related
     services, TCM reviews and ongoing service coordination provided
     by the District. The District could have potentially received $11,5519
     in reimbursement revenues if these 15 students were identified as
     Medicaid-eligible. Furthermore, if the same rate of services were
     5
        Greater Southern Tier Board of Cooperative Educational Services
     6
        Potential Medicaid reimbursement totaling $23,070 for IEP related services,
     $2,850 for TCM reviews and $6,400 for ongoing service coordination
     7
       The total annual income for the 15 families was $266,359.
     8
       The 2006 Federal poverty rate for a family of four was $20,000 annually and
     $1,667 monthly. The 2007 Federal poverty rate for a family of four was $20,650
     annually and $1,721 monthly.
     9
       Potential Medicaid reimbursement totaling $6,043 for IEP related service, $2,008
     for TCM reviews and $3,500 for ongoing service coordination.
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                          11
                                                                                11
                          provided to the remaining 105 students with IEPs that received free
                          lunch, we estimate the District could have potentially received an
                          additional $79,984 in reimbursement. Although the District is not
                          required to provide Medicaid enrollment information to eligible
                          families, it is in the best interest of the District and its taxpayers,
                          residents, and students to do so. However, the District had not taken
                          this step to help students and reduce the District’s and State’s cost for
                          providing services to eligible students.

Claims Processing         During the 2006-07 fiscal year, the District engaged a contractor
                          to process and reconcile its Medicaid claims submitted for
                          reimbursement for services provided to Medicaid-eligible special
                          education students. The contractor provided a web-based application
                          for District staff to report and document service data, as well as an
                          initial training to District staff, management and providers. Although
                          the contract required the contractor to provide monthly claims reports
                          and reconcile the claims submitted by them, we found that District
                          officials did not provide sufficient oversight of the services provided
                          by this contractor. In addition, District officials stated that they relied
                          on the billing contractor to maximize the Medicaid reimbursements.
                          As a result, we found the District did not receive all the Medicaid
                          reimbursements to which they were entitled.

                          IEP-Related Services – IEP-related services that are eligible for
                          Medicaid reimbursement under the SSHSP include physical and
                          occupational therapy, speech therapy, psychological counseling, and
                          skilled nursing services. We reviewed the District’s Medicaid claims
                          to determine whether officials claimed reimbursements for these
                          related services. We reviewed the case records for 14 (4 percent) of
                          the District-identified 331 Medicaid-eligible students with IEPs. We
                          found that the 14 students had 195 services provided to them at a
                          cost of $71,405, which were eligible for Medicaid reimbursement.
                          We determined the contractor only submitted 72 claims (37
                          percent) totaling $27,409 for reimbursement. Therefore, 123 claims
                          totaling $43,996 were not submitted, resulting in $10,999 in lost
                          reimbursement to both the District and the State.

                          If the same rate of services were provided to the remaining 317
                          Medicaid-eligible students with IEPs, we estimate the contractor
                          failed to process and submit claims totaling $996,195. Therefore,
                          the District lost approximately an additional $249,049 in Medicaid
                          reimbursement revenues. Several factors contributed to the
                          inadequate submission of claims, such as lack of sufficient
                          training for District staff, untimely submission of documentation
                          by providers, and the lack of reconciliation by District officials.
                          By allowing the contractor to perform the reconciliations, District
                          officials neglected their oversight responsibilities. Because District

 12       OFFICE OF THE NEW YORK STATE COMPTROLLER
     officials relied on the contractor to reconcile the claims submitted for
     reimbursement to the reimbursements received, they were unaware
     that all eligible claims for services were not being submitted and
     were not aware of rejected claims that could have been considered for
     resubmission.

     Targeted Case Management (TCM)10– Initial and Periodic Case
     Reviews – TCM coordinates medical and non-medical procedures
     for students, and it includes both initial and periodic case reviews,
     and ongoing service coordination. The TCM review process begins
     when a student is referred to his or her district’s CSE. If the CSE
     classifies a student as needing special education, a CSE team puts
     together an IEP with specific goals, objectives and detailed program
     steps to address the student’s needs, and the committee assigns a
     service coordinator to the student. Districts may seek reimbursement
     for the total number of students referred to the CSE, regardless of
     whether the CSE decides to classify the students as needing special
     education. The CSE holds meetings at least annually to discuss each
     referred student’s needs.

     During our review of the case records for 14 students, we
     determined the District did not submit for the reimbursement of
     22 reviews totaling $9,798. Therefore, the District did not receive
     $2,450 in Medicaid reimbursement revenue (25 percent). Because
     the District did not submit for reimbursement of all completed
     reviews, we projected the District lost an additional $28,759 in
     Medicaid reimbursement for reviews conducted for the remaining
     317 Medicaid-eligible students with IEPs.

     Ongoing Service Coordination – To ensure that related service
     providers work together to help achieve a student’s IEP goals and
     objectives, a service coordinator manages the special education
     services provided to a student. The service coordinator will help a
     student gain access to the services specified in the IEP; ensure that
     direct service providers deliver the appropriate services; provide
     a student, a student’s parent, or other responsible individual with
     information and direction to help them access and use the service(s);
     and/or render assistance or intervention to the related service providers
     on educational, social or medical conditions that affect a student’s
     ability to meet the IEP goals and objectives.

     A district must obtain releases11 and seek DOH’s approval to claim
     Medicaid reimbursement for ongoing service coordination costs.
     Upon approval, districts are eligible for ongoing service coordination
     10
        Case reviews include annual, amended/request reviews, and triennial re-
     evaluations.
     11
        HIPAA/Family Education Rights and Privacy Act (Buckley Amendment)

DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                   13
                                                                         13
                          reimbursements of $100 per unit of service per student. A “unit
                          of service” requires at least two contacts per month by the service
                          coordinator. The service coordinator must properly document the
                          contacts with appropriate case notes.

                          In reviewing the 14 students’ case files, we determined the District
                          did not claim Medicaid reimbursement revenues due them for
                          ongoing service coordination during our audit period. Because the
                          District could have potentially claimed $14,500 for ongoing service
                          coordination, they did not receive approximately $3,625 in Medicaid
                          revenue (25 percent). We further estimate the District lost $79,250
                          in Medicaid reimbursement for ongoing service coordination for
                          the remaining 317 Medicaid-eligible students with IEPs. Prior to
                          August 31, 2007, the District did not have any releases for any of
                          their students or approval from the DOH because the contractor did
                          not request approval from DOH. However, we do recognize that
                          the District hired GST BOCES to process their Medicaid billings in
                          September 2007 and started billing for ongoing service coordination
                          after obtaining the necessary releases and approvals.

                          The District and State each lost approximately $562,000 in Medicaid
                          reimbursements for the period July 1, 2006 through August 31, 2007.
                          This was due to the District’s lack of policies and procedures, which
                          define the responsibilities for data collection and documentation and
                          the submission and reconciliation of claims. Finally, District officials
                          did not effectively monitor the reimbursement process.

Recommendations           1. The Board should establish comprehensive written policies and
                             procedures to ensure that all Medicaid claims are prepared in
                             compliance with Medicaid regulations, are properly documented
                             and are submitted in a timely manner.

                          2. District officials should ensure that student eligibility is updated
                             periodically in an effort to claim all potential reimbursements.

                          3. District officials should identify families for potential Medicaid
                             enrollment and provide the necessary application information.

                          4. District officials should furnish service providers with a
                             customized list of Medicaid- eligible classified students, regularly
                             cross-reference Medicaid eligible lists with classified student
                             lists to identify Medicaid eligible classified students, and hold
                             information sessions with service providers to explain proper
                             documentation requirements.

                          5. District officials should reconcile the amounts claimed for
                             Medicaid reimbursement with the amounts received, and

 14      OFFICE OF THE NEW YORK STATE COMPTROLLER
        review any rejections or disallowances to determine whether the
        items may be resubmitted with additional documentation or
        explanation.

     6. District officials should provide adequate training to District
        staff and providers on the proper procedures for filing claims in a
        timely manner.




DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY              15
                                                                    15
                                   Procurement

                           A main component of the District’s internal controls over purchasing
                           relates to policies and procedures governing the procurement and
                           claims processing functions. The Board is responsible for designing
                           internal controls that help safeguard the District’s assets and ensure
                           the prudent and economical use of District moneys when procuring
                           goods and services and to protect against favoritism, extravagance,
                           fraud and corruption. The objectives of a procurement process are
                           to obtain services, materials, supplies or equipment of the desired
                           quality, specified quantity, and at the lowest price in compliance
                           with applicable Board and legal requirements. This helps ensure that
                           taxpayer dollars are expended in the most efficient manner.

                           The Board adopted a purchasing policy and procedures which
                           generally provides adequate guidance to District officers and
                           employees involved in procuring goods and services. However, we
                           found that these policies and procedures did not provide sufficient
                           guidance in regards to the process for obtaining professional services,
                           when procuring transportation services or using credit cards. Finally,
                           the policy and procedures were not distributed to District officials and
                           employees involved in the purchasing process. As a result, District
                           officials and employees made purchases that did not follow the
                           District’s purchasing policy. Therefore, the District risks acquiring
                           goods and services at higher costs than necessary.

Professional Service       Goods and services that are not required by law to be bid must be
Contracts                  procured in a manner so as to assure the prudent and economical
                           use of public moneys in the best interests of the taxpayer. Prudent
                           business practices provide that professional services be awarded after
                           soliciting competition. The request for proposal (RFP) process is
                           meant to ensure that the District receives the desired service for the
                           best price.

                           An RFP is a highly structured document that specifies minimally
                           acceptable functional, technical, and contractual requirements, as
                           well as the evaluation criteria that will govern the contract award.
                           Potential vendors are supplied with copies of the RFP and are
                           requested to submit proposals by a specified date. An RFP serves to:

                              •   Inform vendors that an official contract is pending and
                                  encourages them to submit a proposal.

                              •   Alert vendors that the selection process is competitive.



  16       OFFICE OF THE NEW YORK STATE COMPTROLLER
                                 •   Force vendors to respond factually to the identified
                                     requirements. Vendors know that if selected, they are
                                     contractually bound by their previous representations.

                            We found that the District’s purchasing policy and procedures did not
                            address the process for obtaining professional services. Therefore,
                            we found that District officials generally did not solicit RFPs when
                            obtaining professional services because the District’s purchasing
                            policy did not require them to do so. We reviewed 31 claims for
                            services and found that the District did not solicit RFPs for 18 (58
                            percent) claims from 16 professional service providers. The District
                            paid $527,730 total to these 16 professional service vendors for
                            consulting, legal and training fees. By not using an RFP process for
                            these significant expenditures, the District may not have obtained
                            professional services of acceptable quality, at the most reasonable
                            price.

Transportation Contracts    Generally, each school district in New York State is required by
                            Education Law to provide transportation to and from school to
                            all students residing within the district who are in need of such
                            transportation. In addition to providing its own transportation, a school
                            district may contract with a private contractor for pupil transportation
                            and may award a contract for pupil transportation by competitive
                            bidding, obtaining requests for proposals, or by negotiating with
                            another school district or BOCES.

                            The District provides daily transportation for 4,200 students at
                            a cost of approximately $4.4 million annually, of which over $2.7
                            million12 (64 percent) was paid to private transportation contractors.
                            During the 2006-07 fiscal year the District purchased fuel13 at a cost
                            of $245,081 that was used by private transportation contractors.
                            Fuel allocations to vendors are calculated based on the prior year’s
                            contractual mileage and mile per gallon estimates for different classes
                            of vehicles that were established in the original contract.

                            The District owns 27 vehicles, which it uses to provide transportation
                            for short runs and students with special needs. The rest of the
                            District’s pupil transportation is provided by private transportation
                            contractors. In April 1986, the District requested bids for pupil
                            transportation which consisted of 141 bus routes. Five contractors
                            were awarded 113 routes and 28 bus routes were rejected and re-bid.
                            In May 1986, the District requested bids for the 28 rejected routes and
                            awarded these routes to two contractors. We found the transportation

                            12
                                This amount does not include the cost of fuel provided to the private
                            transportation contractors.
                            13
                                Fuel was purchased through a New York State Office of General Services
                            contract.

                       DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                  17
                                                                                               17
                     contracts included a provision for the District to furnish the
                     contractor, without charge, fuel necessary for the transportation
                     required by the contracts.14 Since 1996 the District requested bids for
                     11 additional routes.15

                     The Law allows for annual extensions16 of pupil transportation
                     contracts that were awarded by competitive bid. Annual extensions
                     may provide for increases up to the regional consumer price index
                     (CPI) for the 12-month period ending on May 31st immediately
                     preceding the commencement of the contract extension. In order to
                     qualify for CPI, the contractor must document that they have had cost
                     increases related to the contract which meet or exceed the current
                     annual CPI. Finally, each district proposing to extend a contract shall
                     maintain, for a period of six years after expiration or termination
                     of the contract extension, or six years after final payment under the
                     contract extension satisfactory evidence of the increase in the cost of
                     the contractor’s operation during the 12-month period immediately
                     preceding the month in which the contract terminates.

                     The District competitively bid the District’s transportation contracts
                     and applied for extensions from SED as required by Law. However
                     our review of the original transportation contracts and subsequent
                     extensions revealed the District’s transportation needs have materially
                     changed since their inception. Due to these changes we had the
                     following concerns:

                          •   Transportation contracts and extensions filed and approved
                              by the Commissioner of Education for the 2006-07 year
                              totaled $2,428,507. The total paid exceeded this amount by
                              $304,200. District officials stated the increased costs were
                              related to snow days, road tests, unscheduled half days (for
                              example elementary school closes half day and high school is
                              still open causing an extra bus run), fingerprinting clearance,
                              and extra trips. We could find no contractual provision for
                              these increased payments and District officials were unable to
                              provide any additional supporting documentation.



                     14
                        The amount of fuel furnished would be limited to: (1) the amount actually used
                     in the completion of route miles of the contracts or (2) one gallon for every four (4)
                     route miles for 30 – to 66 passenger, non-diesel buses, and one gallon for every 10
                     route miles for non-diesel buses smaller then 30-passenger. Diesel fuel is based on
                     one gallon for every eight route miles.
                     15
                        Three routes in 1996, four routes in 1997, two routes in 1999, one route in 2000
                     and one route in 2004
                     16
                        Annual extensions of fixed-price contracts, contracts based upon unit rates, such
                     as per- bus, per-pupil or per-mile, and contracts based upon a combination of a fixed
                     price and unit rate

18   OFFICE OF THE NEW YORK STATE COMPTROLLER
                             •   The total mileage for the 13 original transportation contracts
                                 was 3,378 miles. According to the contracts’ extensions, the
                                 District’s transportation mileage for the 2006-07 fiscal year
                                 was 4,846 miles, an increase of 1,468 miles (43 percent). This
                                 is a material change to the original contracts.

                             •   Even though the contractors have stated their annual mileage
                                 has increased, District officials have not reviewed the
                                 contractors’ bus routes since they were outsourced, some of
                                 which are over 20 years old.

                             •   The District does not maintain a database of bus routes and
                                 students. Therefore, District officials are not able to verify the
                                 mileage information in the contract extensions.

                             •   District officials have not taken steps to verify the fuel
                                 efficiency of the vehicles employed by the vendors. The
                                 current fuel efficiency figures in use date back to the original
                                 contracts.

                             •   Documentation was not available to support the District’s
                                 calculation of CPI-related cost increases.

                          The District can incur increased costs when competition is not
                          solicited when contract terms, such as route mileage, change
                          materially. Increased costs can also be incurred when District officials
                          do not have a system in place to independently verify important
                          factors such as miles or vendor fuel consumption. This could result in
                          the District providing fuel in excess of that needed for District related
                          purposes.

                          The District contracted for an administrative and operational
                          efficiency study of its transportation program in 1997, which
                          recommended several corrective actions, such as the District should
                          computerize its bus routes and solicit bids for transportation (both
                          District-provided and contracted transportation). Because the
                          District did not implement any of the study’s corrective action, we
                          have identified the same weaknesses.

Credit and Procurement    An adequate policy addressing the use of District credit cards is an
Cards                     essential element of internal control. At a minimum, a sufficient
                          credit card policy establishes guidelines for card use and procedures
                          for monitoring usage. To retain a reasonable level of control over
                          credit card purchases, sound policies specify procedures to be
                          followed for required approvals and supporting documentation.



                     DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                  19
                                                                                             19
                     The District used credit cards for travel expenses (i.e., hotel, airline),
                     meals, textbooks, supplies, registration fees for conferences, and
                     postage at a total cost of $67,851. The District also used vendor
                     procurement cards for purchases at a local grocery store ($19,482)
                     and at a home improvement store ($10,451).

                     The District has adopted a policy to govern the use of credit cards.
                     The policy requires that a listing of all individuals issued District
                     cards be maintained by the Business Office. The policy further
                     provides:

                         •   Credit cards can only be used for legitimate District
                             expenditures.

                         •   The use of credit cards must not circumvent District policy on
                             purchasing.

                         •   Users must submit detailed documentation supporting the
                             purchase.

                         •   The Business Official is responsible for periodically
                             monitoring the use of each credit card and reporting serious
                             problems to the Superintendent and the Board.

                     The policy did not specifically address who was responsible for
                     opening accounts, and authorizing users and credit limits.

                     District officials did not maintain a list of who had been issued credit
                     and procurement cards. District officials stated that each building had
                     one or two procurement cards as well as a few of the departments,
                     such as Buildings and Grounds, Headstart, and Food Services.
                     District officials estimated that they had a total of five credit cards
                     and 20 procurement cards. Because the District did not have a
                     listing of cards, we developed a listing from billing documentation
                     and information obtained directly from the local grocery store. We
                     determined the District actually had seven credit cards and 143
                     procurement cards.

                     We found that the use of these credit and procurement cards
                     circumvented the established purchasing internal controls. Of
                     the 184 purchase orders related to credit and procurement card
                     purchases, 70 were blanket purchase orders with vague descriptions
                     of what was authorized to be purchased and 65 were the result of
                     confirming purchase orders. The use of blanket and confirming
                     purchase orders weakens important internal controls of preapproval
                     and monitoring of purchases by responsible officials. Furthermore,


20   OFFICE OF THE NEW YORK STATE COMPTROLLER
                       the District’s purchases with procurement cards at the local grocery
                       and home improvement store could be considered high risk because
                       they could easily be used for personal use, which makes pre-approval
                       and monitoring even more critical. For example, the District spent
                       $19,48217 at the local grocery store to purchase various items.
                       However, District officials were unable to determine if the items
                       purchased were for educational or personal purposes because the use
                       of these procurement cards circumvented the procurement process.
                       Finally, we found no evidence that the Business Manager monitored
                       the use of credit cards as required by the policy.

                       The Board failed to appropriately authorize the use of District credit
                       and procurement card accounts. District officials failed to enforce
                       the District’s policy and monitor the cards provided to employees.
                       This created an opportunity to circumvent the District’s policies
                       which could result in payments for unauthorized, unnecessary, or
                       inappropriate purchases.

Recommendations        7. The Board should amend the District’s adopted procurement
                          policy to require District officials to award professional services
                          contracts only after soliciting competition.

                       8. District officials and employees who are involved in the
                          purchasing process should be provided with a copy of the
                          District’s purchasing policy.

                       9. The Board should ensure that transportation contracts terms are
                          clearly defined and then compensate the transportation vendors in
                          accordance with the terms of the applicable contracts.

                       10. District officials should review their current transportation needs
                           including the number and location of students, bus routes and
                           miles traveled, to determine the most efficient and economical
                           means of transporting students. Based on the results, District
                           officials should revise bus routes to make them as efficient as
                           possible.

                       11. Once the most efficient bus routes are determined, the District
                           should bid its transportation needs.


                       17
                           The District purchased food, personal care items, paper supplies, cleaning
                       supplies and small maintenance items with their local grocery store’s procurement
                       cards including soda, pizza, food supplies, paper plates, plastic ware, cups, napkins,
                       prescriptions, crackers, stickers, pens, film, film processing, baskets, glue, address
                       labels, snacks, candy, water, shaving cream, lice kit, donuts, bagels, pencil cups,
                       shoe boxes, ice cream, detergent, bleach, drill bits, tools sets, paint, mini-blinds and
                       weed trimmers.

                  DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                                21
                                                                                                        21
                     12. The Transportation Director should independently verify vendor
                         representations regarding route mileage.

                     13. District officials should maintain a listing of the officials and
                         employees who have been assigned credit and procurement cards.
                         District officials should control and monitor the use of credit and
                         procurement cards and ensure purchases comply with District
                         policies.




22   OFFICE OF THE NEW YORK STATE COMPTROLLER
                    Cellular Phones

              The widespread use of cellular phones in the workplace requires
              that explicit guidelines be established setting objective criteria for
              determining need and assigning cellular phones to employees in a
              cost effective manner. Like any other District asset, it is important
              that cellular phones be properly controlled and their usage carefully
              monitored. The District spent approximately $37,646 for up to 92
              cellular phones on 10 cell phone plans18 during the 2006-07 fiscal
              year.

Policy        The Board adopted a cellular phone policy, which states certain
              employees will be assigned District-owned cellular phones and
              certain administrative employees will use a personal data assistant
              (PDA) in order to meet their job responsibilities. The policy further
              states the Superintendent or their designee must approve all cellular
              phone and PDA users and that the Business Office will maintain a
              list of approved users and report the users to the Board biannually
              in January and July. The policy also states District employees
              are responsible for any personal use of the cellular phone or PDA
              that results in additional costs beyond the cost of the plan for the
              employee. The Business Office must determine these additional costs
              and obtain reimbursement from the employee. The Business Office
              is also required to review the District’s cell phone/PDA plans and
              employee usage on an annual basis and recommend any appropriate
              modifications. Finally, the policy requires the internal auditor to audit
              the bills for cellular phone/PDA usage and subsequent reimbursement
              of expenses at least once a year and report on the conformance with
              the policy.

              We found that District officials did not provide sufficient oversight
              by monitoring cellular phone use based on guidelines of the cellular
              phone policy. For example, the Business Office could not provide us
              with a complete and up-to-date list of authorized users and cellular
              phones. Our review of the cellular phone bills identified 16 cellular
              phones that were not included on the October 22, 2007 list provided
              by the Business Office. In addition, we found 10 cellular phones were
              removed from the District’s cellular phone plans but were still on the
              list. We also found that the Superintendent did not approve all cell
              phone users and the Business Office did not provide an up-to-date
              list of authorized users to the Board as required. Finally, the Business
              Office did not monitor employee usage and the internal auditor did


              18
                 The District had two pay-as-you-go plans, one 25-minute plan, one 400-minute
              plan, four 450-minute plans, one 900-minute plan and one 1,000-minute plan.

         DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                        23
                                                                                       23
                               not review cellular phone bills, usage and reimbursements on an
                               annual basis.

                               Because District officials failed to follow or enforce the cellular phone
                               policy, we reviewed the District’s cellular phone use for a one-month
                               period. We found that the District had 80 cellular phones at a cost of
                               $4,282. We determined 36 of the 80 cellular phones19 were used less
                               than 30 minutes and the remaining 44 cellular phones were used an
                               average of 594 minutes for the month. We reviewed the billing records
                               for the 36 cellular phones with low usage. For the 2006-07 fiscal year,
                               we found the 36 cellular phones used 2,609 minutes totaling $5,832.
                               The following chart provides the usage detail for these cellular
                               phones:

                                    Number of Cellular                                  Average Annual Cost per
      Average Monthly Usage                                       Total Cost
                                        Phones                                              Cellular Phone
   No usage                                11                                  $1,377                      $125
   Less than 2 minutes                      9                                  $1,170                      $130
   Between 2 and 10 minutes                 7                                  $1,477                      $211
   Between 11 and 20 minutes                6                                  $1,112                      $185
   Between 21 and 30 minutes                3                                    $696                      $232
   Total                                   36                                  $5,832

                               By not reviewing usage and assuring phones are necessary and
                               assigned to the most efficient plan, the District has incurred
                               unnecessary costs.

                               Finally, calls made on holidays, weekends, outside of New York State
                               and after 6 p.m. in the evening have a higher risk of being for personal
                               use. For the one-month period tested, we determined that 9,444 (36
                               percent) of the minutes charged were in these higher risk categories.20
                               We found no indication that the Business Office or the claims auditor
                               questioned these calls and determined whether or not they were for
                               business purposes. When the Board does not ensure that their policies
                               are complied with, there is an increased risk that District assets will
                               be used improperly.

Inventory                      Clear and concise policies and internal controls with regard to
                               assets are necessary for District officials to manage and secure the
                               District’s property, especially portable assets such as cellular phones.
                               District officials need to ensure that complete and accurate records
                               are maintained for assets. Such records are necessary to affix
                               responsibility for the control and custody of property and provide
                               assurance that such property is properly safeguarded.
                               19
                                 26 of the 36 cellular phones had no usage for the month
                               20
                                  19 percent weekend and holiday minutes, 16 percent evening minutes and 2
                               percent outside of New York State minutes

 24         OFFICE OF THE NEW YORK STATE COMPTROLLER
                       District officials did not maintain a record of the disposition of the
                       cellular phones issued to officials and employees. Because of the
                       number of cellular phones and the lack of a complete, up-to-date
                       list of users, we attempted to locate a sample of 21 cellular phones.
                       We were unable to locate 11 of the 21 (52 percent) cellular phones.
                       When we later interviewed District employees, they informed us
                       that seven of the 11 phones were returned to the Business Office.
                       Business Office employees confirmed that four phones had been
                       returned. However, they could not verify the disposition of the other
                       three phones.

                       Assets for which there are no records of assignment are susceptible to
                       being lost or stolen. With a complete and up-to-date list of authorized
                       users and cellular phones, District officials would be able to
                       determine who should have custody of the cellular phones. Without
                       this list, it becomes difficult or impossible to assign responsibility
                       when phones cannot be located.

Recommendations            he
                       14. T Board and Superintendent should identify the District
                          employees whose job duties require a District-provided cellular
                          phone and determine the appropriate plan to meet those needs.

                       15. District officials should ensure compliance with the District’s
                           cellular phone policy.

                       16. The Business Office and claims auditor should review cellular
                           phone usage and reimbursement. In particular, the claims auditor
                           should question high-risk calls to see if they are for a District
                           purpose.

                       17. The Business Office should maintain a complete, up-to-date list of
                           all users and document the disposition of all phones.




                  DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                25
                                                                                        25
                                          APPENDIX A

                      RESPONSE FROM DISTRICT OFFICIALS

The District officials’ response to this audit can be found on the following pages.




  26        OFFICE OF THE NEW YORK STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY   27
                                                         27
28   OFFICE OF THE NEW YORK STATE COMPTROLLER
DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY   29
                                                         29
                                          APPENDIX B

                     AUDIT METHODOLOGY AND STANDARDS

Our overall goal was to assess the adequacy of the internal controls put in place by officials to
safeguard District assets. To accomplish this, we performed an initial assessment of the internal
controls so that we could design our audit to focus on those areas most at risk. Our initial assessment
included evaluations of the following areas: financial oversight, cash receipts and disbursements,
purchasing, payroll and personal services and information technology.

During the initial assessment, we interviewed appropriate District officials, performed limited tests
of transactions and reviewed pertinent documents, such as District policies and procedures manuals,
Board minutes, and financial records and reports. In addition, we obtained information directly from
the computerized financial databases and then analyzed it electronically using computer-assisted
techniques. This approach provided us with additional information about the District’s financial
transactions as recorded in its databases. Further, we reviewed the District’s internal controls and
procedures over the computerized financial databases to help ensure that the information produced by
such systems was reliable.

After reviewing the information gathered during our initial assessment, we determined where
weaknesses existed, and evaluated those weaknesses for the risk of potential fraud, theft and/or
professional misconduct. We then decided upon the reported objective and scope by selecting for
audit those areas most at risk. We selected Medicaid reimbursement, procurement and cellular phones
for further audit testing.

To accomplish the objective of this audit, our procedures included the following:

For Medicaid reimbursements:

   •   We assessed the internal controls over the identification, monitoring, and preparation of
       Medicaid reimbursement claims.

   •   We interviewed District personnel involved in the Medicaid reimbursement process, and tested
       selected records and transactions.

   •   We reviewed the lists of Medicaid-eligible students, students with IEPs, and students receiving
       free or reduced lunches and compared these listings to identify students whose IEP-related
       services were eligible for reimbursement.

   •   We compared the BOCES-prepared list of Medicaid eligible students against the District’s
       prepared list of students with IEPs and identified an additional 84 Medicaid-eligible IEP
       students.

   •   We reviewed the case records and billing summaries for 27 (32 percent) of the additionally
       identified 84 Medicaid-eligible students with IEPs to determine the amount of claims not
       submitted for reimbursement. We estimated the same rate of services to the other 57 students
       and projected the potential amount not claimed for reimbursement.

  30        OFFICE OF THE NEW YORK STATE COMPTROLLER
   •   We compared the list of students with IEPs to the list of students receiving free lunches and
       identified 120 students that may be eligible for Medicaid. We reviewed the case records and
       billing summaries for 15 of these students and estimated the amount of billable services for the
       remaining 105 students.

   •   We reviewed the case records and billing summaries for 14 (4 percent) of the 331 District
       identified Medicaid-eligible students with IEPs and determined the total amount of billable IEP
       related services and the number of claims not submitted for reimbursement. We estimated the
       same rate of services were provided to the remaining 317 Medicaid-eligible students with IEPs
       and calculated the amount of potential billable services and reimbursement.

   •   We calculated the number of months a student was eligible for the service during the 14-month
       audit period for the 14 students to determine the amount of unclaimed reimbursement for
       TCM ongoing service coordination. We then multiplied the number of eligible months by the
       reimbursable rate of $100. We projected the same number of months for the remaining 317
       Medicaid-eligible students and multiplied it by the reimbursable rate.

   •   We calculated the reviews conducted for 14 classified Medicaid-eligible students and
       multiplied them by the corresponding rates to determine the amount of unclaimed
       reimbursement for the TCM initial and periodic reviews. We then projected the same rate of
       reviews for the remaining 317 Medicaid-eligible students and calculated the potential amount
       of unclaimed reimbursement.

For procurement:

   •   We interviewed District officials about the policies and procedures related to the District’s
       financial operations.

   •   We reviewed 31 claims for professional services providers.

   •   We reviewed all the District’s transportation contracts and extensions since 1986. We reviewed
       the supporting documentation for all the mileage and costs related to these contracts.

   •   We obtained a procurement card list from the grocery store in order to determine the total
       number of cards used by the District. We reviewed the supporting documentation for these
       purchases totaling $19,482 including purchase orders and receipts.

   •   We reviewed 381 transactions related to procurement cards from a local home improvement
       during our scope period, totaling $10,451.

   •   We determined the District used credit cards for travel expenses (i.e., hotel, airline), meals,
       textbooks, supplies, registration fees for conferences, and postage at a total cost of $67,851.
       We reviewed the supporting documentation to determine if the purchases complied with the
       District’s credit card policy.




                          DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY                 31
                                                                                                 31
For cellular phones:

   •   We reviewed the District’s cellular phone bills for the 2006-07 and 2007-08 fiscal years.
       We selected the cellular phone statements dated November 26, 2007 – December 26, 2007,
       November 25, 2006 – December 14, 2006 and November 10, 2006 – December 9, 2006 for use
       testing and analysis. We also obtained a list of users and contracts.

   •   We conducted a physical inventory of a sample of 21 cellular phones.

We conducted this performance audit in accordance with generally accepted government auditing
standards (GAGAS). Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.




  32        OFFICE OF THE NEW YORK STATE COMPTROLLER
                                           APPENDIX C

           HOW TO OBTAIN ADDITIONAL COPIES OF THE REPORT


To obtain copies of this report, write or visit our web page:




                                    Office of the State Comptroller
                                    Public Information Office
                                    110 State Street, 15th Floor
                                    Albany, New York 12236
                                    (518) 474-4015
                                    http://www.osc.state.ny.us/localgov/




                           DIVISION OF LOCAL GOVERNMENT AND SCHOOL ACCOUNTABILITY   33
                                                                                    33
                                                    APPENDIX D
                             OFFICE OF THE STATE COMPTROLLER
                              DIVISION OF LOCAL GOVERNMENT
                               AND SCHOOL ACCOUNTABILITY
                                            Steven J. Hancox, Deputy Comptroller
                                            John C. Traylor, Assistant Comptroller

                                      LOCAL REGIONAL OFFICE LISTING
BUFFALO REGIONAL OFFICE                                      GLENS FALLS REGIONAL OFFICE
Robert Meller, Chief Examiner                                Karl Smoczynski, Chief Examiner
Office of the State Comptroller                               Office of the State Comptroller
295 Main Street, Suite 1032                                  One Broad Street Plaza
Buffalo, New York 14203-2510                                 Glens Falls, New York 12801-4396
(716) 847-3647 Fax (716) 847-3643                            (518) 793-0057 Fax (518) 793-5797
Email: Muni-Buffalo@osc.state.ny.us                          Email: Muni-GlensFalls@osc.state.ny.us

Serving: Allegany, Cattaraugus, Chautauqua, Erie,            Serving: Clinton, Essex, Franklin, Fulton, Hamilton,
Genesee, Niagara, Orleans, Wyoming counties                  Montgomery, Rensselaer, Saratoga, Warren, Washington
                                                             counties

ROCHESTER REGIONAL OFFICE                                    ALBANY REGIONAL OFFICE
Edward V. Grant, Jr., Chief Examiner                         Kenneth Madej, Chief Examiner
Office of the State Comptroller                               Office of the State Comptroller
The Powers Building                                          22 Computer Drive West
16 West Main Street – Suite 522                              Albany, New York 12205-1695
Rochester, New York 14614-1608                               (518) 438-0093 Fax (518) 438-0367
(585) 454-2460 Fax (585) 454-3545                            Email: Muni-Albany@osc.state.ny.us
Email: Muni-Rochester@osc.state.ny.us
                                                             Serving: Albany, Columbia, Dutchess, Greene,
Serving: Cayuga, Chemung, Livingston, Monroe,                Schenectady, Ulster counties
Ontario, Schuyler, Seneca, Steuben, Wayne, Yates
counties

SYRACUSE REGIONAL OFFICE                                     HAUPPAUGE REGIONAL OFFICE
Eugene A. Camp, Chief Examiner                               Jeffrey P. Leonard, Chief Examiner
Office of the State Comptroller                               Office of the State Comptroller
State Office Building, Room 409                               NYS Office Building, Room 3A10
333 E. Washington Street                                     Veterans Memorial Highway
Syracuse, New York 13202-1428                                Hauppauge, New York 11788-5533
(315) 428-4192 Fax (315) 426-2119                            (631) 952-6534 Fax (631) 952-6530
Email: Muni-Syracuse@osc.state.ny.us                         Email: Muni-Hauppauge@osc.state.ny.us

Serving: Herkimer, Jefferson, Lewis, Madison,                Serving: Nassau, Suffolk counties
Oneida, Onondaga, Oswego, St. Lawrence counties

BINGHAMTON REGIONAL OFFICE
Patrick Carbone, Chief Examiner                              NEWBURGH REGIONAL OFFICE
Office of the State Comptroller                               Christopher Ellis, Chief Examiner
State Office Building, Room 1702                              Office of the State Comptroller
44 Hawley Street                                             33 Airport Center Drive, Suite 103
Binghamton, New York 13901-4417                              New Windsor, New York 12553-4725
(607) 721-8306 Fax (607) 721-8313                            (845) 567-0858 Fax (845) 567-0080
Email: Muni-Binghamton@osc.state.ny.us                       Email: Muni-Newburgh@osc.state.ny.us

Serving: Broome, Chenango, Cortland, Delaware,               Serving: Orange, Putnam, Rockland, Westchester
Otsego, Schoharie, Sullivan, Tioga, Tompkins                 counties
counties



  34            OFFICE OF THE NEW YORK STATE COMPTROLLER

				
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