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Audit says account at Valley Stream district overfunded

The Valley Stream 13 school district established an employee benefits accrued liability reserve without a board resolution and overfunded it by $3.3 million, according to a recent audit by the state comptroller.

State Comptroller Thomas DiNapoli's auditors also found the district used more than $900,000 from the reserve for improper purchases from 2003 to 2005, they said in a report released earlier this week.

"Funding this reserve at a greater than reasonable level essentially results in property tax levies that are higher than necessary," the report said.

State law says the only costs that can be paid from these reserve funds are for compensated absences earned by and paid to employees (or to a third party on their behalf) at the time of separation, along with related administrative costs.

District officials improperly used the reserve as a source for the general fund operating budget and to pay for retiree health insurance premiums.

In response, the district said the board had adopted a resolution to establish the reserve and pay compensated leave from it, rather than the general fund.

In a written response to the comptroller, officials said "as was the case in hundreds of other districts in New York, we were under the impression that the . . . reserve could be used for other post employment benefits."

Auditors also found the board appointed a treasurer annually and referred to her pay as a "retainer," rather than a salary, indicating the district treated the treasurer as if she were an independent contractor.

But school officials responded that "while statutes may exist that indicate a treasurer be an employee, the district takes the position that it is prudent to delegate the role to an independent contractor."

An audit of Long Beach schools found the board did not set written policies and procedures over payroll or fringe benefit processes and failed to ensure employees' attendance and time records were properly maintained. Separation payments were not properly calculated.

As a result, errors in employees' accrued leave balances occurred without detection and separation payments were incorrectly calculated and paid.

For example, the accrual records of all seven administrators auditors reviewed had inaccurate sick or vacation leave balances which, if converted into cash payments, might result in the overpayment of $58,431 in benefits to some administrators and the underpayment of $7,678 to others.

Schools Superintendent Robert Greenberg said Thursday that there were no serious findings in the audit and that the district has followed the comptroller's recommendations.

"It is important to note that in the report there was no citation that salaries or wages were inaccurately paid," he said in a written response. The district has hired a new payroll clerk, he said.

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