July 15, 2010

Contact: Dr Charles Dedrick, District Superintendent, 518-862-4901
                  Mr. Mark Jones, Assistant Superintendent for Management Services, 518-862-4920

The Officials with the Capital Region BOCES said they dispute some of the findings included in an audit released today by the New York State Comptroller’s Office, which reviewed reserve funds held by six BOCES around New York State.

“We thank the Comptroller’s Office for the review, which has shown us areas in which we can tighten up some of our practices,” said District Superintendent Charles Dedrick. “However, we disagree with the audit’s conclusions that we maintain reserves not allowed by law.”

The audit examined reserves held by six BOCES: Capital Region, Erie 1, Madison-Oneida, Nassau, Rockland and Western Suffolk BOCES. The audit focused on two main issues: reporting of the reserve funds to component school districts and the amount of funds held in reserve, including in accounts the comptroller’s office believes BOCES is not legally allowed to hold.

Reserve funds are like savings accounts, funds set aside to cover future unexpected expenses and to budget ahead for anticipated future costs. They are a standard accounting practice also used by school districts and municipalities, and are considered fiscally wise. All BOCES’ reserve funds are regularly monitored and regulated, including through annual internal and external audits, as well as previous audits by the comptroller’s office.
 

Additional transparency

The audit report concedes that all the audited BOCES verbally report the size and use of reserve funds to their component school districts, but suggested more written notifications be made.

The Capital Region BOCES has already begun increased regular written communications with districts about reserve accounts, including through its annual budget publication, budget section of its website, etc. “We are in regular communications with our districts about all areas of our budget, and thank the Comptroller’s Office for his additional suggestions,” said BOCES Assistant District Superintendent for Management Services Mark Jones.

Legal right to have workers' compensation reserve

However, the Capital Region BOCES stands firm in its legal right to hold workers’ compensation reserves. “We stand by our attorney’s and external CPA’s opinions as well as General Municipal Law, that BOCES has the right to have a workers’ compensation reserve,” said Jones. “To hold such a reserve is legal, a wise business practice, and helps ensure schools’ and BOCES’ long-term financial stability.”

A workers’ compensation reserve is used to cover possible future claims. Such a reserve, as with all reserves, allows BOCES to protect school districts by managing expenses and avoiding large increases in BOCES service and administrative fees from year to year. “This in turn allows districts to control and budget their expenses. Reserve accounts are key to schools’ and BOCES long-term financial stability,” Dedrick said.

Written response to draft audit report

The audit report released today indicates the Capital Region BOCES chose not to respond to the draft report. The written response to the comptroller’s audit for the six BOCES, dated June 21, 2010, is available online [PDF].

Also available on the Comptroller's site is the audit specific to Capital Region BOCES, with the BOCES' response included at the end of the report.