January 15, 2011
Business offices turn to BOCES
Small schools increasingly using organization to help manage the books
A team of eight payroll and accounts receivable clerks in Syracuse has provided an answer for four local school districts trying to find a way for their tiny business staffs to avoid criticism from the state Comptroller’s Office.
Comptroller audits the past several years have told small rural districts to separate what business staff are overseeing and handling, no easy task if they have only two or three staff handling taxpayers’ money.
So schools have turned to a relatively new BOCES service: the Central Business Office.
DeRuyter, told by auditors that its district treasurer was doing too much, joined Cincinnatus, Homer and Marathon, in contracting for some business functions through the eight-person Central Business Office at Onondaga-Cortland-Madison BOCES in Syracuse.
Five Onondaga County districts use the office as well.
Dryden, told to separate duties among its three-person staff, contracted with a similar, six-person office at Tompkins-Seneca-Tioga BOCES.
The shared service has another benefit: consolidation of government offices and services, a goal for Gov. Andrew Cuomo.
“When a district business office has a retirement and is looking at what to do, we’re at the point now — with the state budget cuts — where a district has to look at all options,” said Deborah Ayers, Onondaga-Cortland-Madison BOCES assistant superintendent. “We provide a high level of expertise and training. With a small office, not only is it hard to segregate duties in a way the state wants, a vacation means that person is gone and it can shut down operations, where our CBO keeps going.”
Cortland, McGraw and Groton school districts do not contract with a BOCES Central Business Office. Auditors told Cortland not to, in a 2008 audit report.
The state auditors praised Groton schools in September 2009 for excellent business operations, one of 33 districts cited among the 733 audited.
Moravia has payroll and accounts payable done through Cayuga-Onondaga BOCES.
Comptroller’s Office spokesperson Emily DeSantis said audits focus on overall financial accountability and functions, and sometimes on specific situations such as whether bidding practices or a school closing saved money.
“With small districts, if they can’t totally segregate duties, they can make sure there’s a level of oversight,” DeSantis said. “There are compensating controls they can implement.”
“We received our audit in 2008 and it was one of the few positive audits, because we were already using a CBO through Broome-Tioga BOCES,” said Cincinnatus Superintendent of Schools Steve Hubbard. “We had some oversight through them that other small districts didn’t have.”
The district uses BOCES for accounts payable, payroll and district treasurer duties, Hubbard said.
Contracting with BOCES is a growing trend as districts have been told by state auditors to separate internal control methods and other business practices.
McGraw has 2 1/2 staff to handle business matters: a payroll clerk, a treasurer and accounts payable clerk and a business administrator. And the half position is Business Administrator Russ Hearton, whose job is shared with Cincinnatus and is paid through Onondaga-Cortland-Madison BOCES.
A state audit released last month said McGraw had placed too much responsibility in the district treasurer’s hands, in how user access rights to financial software were managed.
The district already knew about the problem, from its own auditor, and was deciding how to address it. The oversight of user access rights was shifted to an employee outside the business office.
A similar criticism of Dryden Central School’s business office caused the district to join the BOCES service, said Superintendent of Schools Sandy Sherwood.
Dryden has three staff who handle financial matters, using Tompkins-Seneca-Tioga BOCES for payroll and accounts payable.
“But we still have a person who is both tax collector and senior accounts payable clerk,” Sherwood said. “She wears two hats.”
The same thing happened with DeRuyter Central School, after state auditors said last year that the district treasurer was doing too many things and some invoice procedures needed to be tightened.
Business Manager Jim Southard said joining the BOCES service lessened her workload, so she was not “doing the work of 1 1/2 people.”
The district pays BOCES about $45,000 for the business service.
The cost depends on the services a district contracts for.
School officials say the audits are important.
“They’re doing a very necessary job, taking an outside look at things,” Southard said. “One problem is, we have four different auditors, which makes sense for a big district like Liverpool but not for a small district.”
Hubbard said the audits were prompted by a Long Island school administrator who misused thousands of dollars from his district.
“We want to do the right thing, so if the state wants to audit us, we are glad to know what procedures we should not be doing,” he said.
The BOCES Central Business Offices have not been a complete answer to the state auditors’ concerns, as the auditors have said the service poses a conflict if a person is handling bills for other BOCES services, through claims auditing.
Cortland used a BOCES claims auditor for a few years, until the state auditors told the district to stop, in a 2008 audit report that also faulted the district’s methods of tracking purchases.
Ayers said the state Legislature will consider ways this year to allow claims auditing by BOCES in a way that satisfies the Comptroller’s Office.
DeSantis said the Central Business Office is a fine solution as long as it does not cost taxpayers more than a staff member would.
“It’s a good option but it shouldn’t be the only way to handle finances,” she said.
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