Hudson rebuts audit findings but admits some errors

HUDSON–School district officials this week discussed a recent state grant administration audit, saying some of the criticisms by the Office of the State Comptroller seemed unfair. But the officials also plan to cooperate with the state’s recommendations to avoid problems in the future.

Present at the Monday, April 28 meeting were District Superintendent Maria Suttmeier, Business Executive Robert Yusko, Board of Education President Kelly Frank and board members Tiffany Hamilton and Carrie Otty.

Though the audit found no evidence that the district knowingly spent grant money inappropriately, the examiner’s report still warned that “District officials may be jeopardizing their receipt of future grant funding, may have to refund previously received grant money, or may be subject to civil penalties” because current district practices led to discrepancies and were, at the time of the audit, inadequate for detecting whether wrongdoing has occurred.

“District officials were told that there was no evidence of fraudulent purchases or activity,” Ms. Suttmeier and Mr. Yusko wrote in their February 25 response to a draft report from the comptroller’s office. “But the report does not make this clear.” Instead, they said, the audit emphasizes potential problems and consequences.

“The state is auditing everybody and everything they can,” said Ms. Frank at this week’s meeting.

The audit was conducted by the Division of Local Government and School Accountability, a part of the office of state Comptroller Thomas DiNapoli. It covered the period from July 1, 2011 through May 6, 2013. Mr. DiNapoli’s office released the report in mid-March 2014.

Mr. Yusko said this week that during the period of the audit then District Business Manager Dan Barrett died suddenly on January 1, 2012. An interim replacement could start only several weeks later. Mr. Yusko, who became the permanent replacement for Mr. Barrett, did not start work until October 2012.

Mr. Yusko also pointed out that the district reconciles its financial records at the end of June, when the school year ends.

If the auditors had “gone until the end of the [school] year,” rather than cutting off the audit May 6, Ms. Frank said, some of the problems in the audit might have been resolved.

The auditors examined random samples of disbursements from each of five grants from 15 state and federal agencies the district received for the 2011-2012 year, including 101 disbursements.

Their report concludes that “district officials did not ensure that all disbursements were made in accordance with grant guidelines and the district’s purchasing policies and procedures.” Among the findings of the audit are:

•38 disbursements accounting for $79,400 out of more than $282,000 examined “were not approved, not properly supported or not expended for legitimate grant purpose.” The report says, “These discrepancies occurred because grant administrators did not thoroughly review each claim”

•“Grant expenditures reported to state Department of Education (SED) totaling $127,680 lacked sufficient supporting documentation to substantiate employee benefits, salaries and purchased services. As a result, district officials… cannot be certain that grant proceeds were expended for [their] authorized…purposes”

•Inability to obtain “specific details… showing employees’ actual time spent performing grant activities,” at least in the form the auditors preferred, because the district records the data by year rather than pay period

•Expenditures recorded are equal to grant sizes, a result the auditors questioned

•“One employee providing grant services was on unpaid status for extensive absences.”

The report blames “district officials,” “grant administrators,” and “the Treasurer” for these problems. But this week Mr. Yusko defended the district, saying that the amount of money auditors question as not properly accounted for was small compared to the total of more than $2 million in grants the district was handling during the audited period.

The chief problems, Ms. Frank said, seemed to be grant administrators not signing off on requisitions and grant money spent on items not eligible under the terms of the grant.

And Ms. Suttmeier recounted the case of a district-wide newsletter, which originally qualified for grant funding as long as it included grant news. But the regulations changed, making it not eligible for grant money unless it excluded all non-grant news. School administrators were not aware of the change, she said.

Mr. Yusko recently met with the district’s grant administrators—April Prestipino (coordinator of school improvement), Kim Lybolt (director of Student Services), and Kathy Clark. “I wasn’t paying attention,” to some grant-related matters, he admitted. He said he no longer approves grant expenditures without having the signature of the grant administrator.

In addition, Mr. Yusko acknowledged that the district has had discrepancies between its books, audits and other reports. “This is unacceptable,” he said.

He said the district could modify its accounting software to match grant requirements, but he said that would take considerable time for the district employees to do.

As for expenditure amounts exactly equaling grant awards, Mr. Yusko said that if the examiners had looked at the figures just after the examination period on May 6, they would have seen the more credible numbers.

“We’re going to go forward,” Mr. Yusko said.

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