THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

Michael Abbott, CPA

Director

Office of Audit Services

Tel. (518) 473-4516

Fax (518) 473-0259

E-mail: mabbott@mail.nysed.gov

March 5, 2004

Ms. Ellen Murray

Board President

Madison-Oneida BOCES

PO Box 168

4937 Spring Road

Verona, New York 13478-0168

Dear Ms. Murray:

The following is our final audit report (BOC-1299-6) of the Madison-Oneida Board of Cooperative Educational Services (BOCES) for the period July 1, 1998 through June 30, 1999. The audit was conducted pursuant to Sections 305 and 1950 of the Education Law in pursuit of Goal #5 of the Board of Regents/State Education Department Strategic Plan: “Resources under our care will be used or maintained in the public interest.”

Ninety days from the issuance of this report, BOCES officials will be asked to submit a report on actions taken as a result of this audit. I appreciate the cooperation and courtesies extended to the staff during the audit.

Sincerely,

Michael Abbott, CPA

Enclosure

cc: Commissioner Mills, T. Savo, J. Kadamus, B. Porter, T. Sheldon, J. Canaday, J. Stevens,

C. Szuberla, C. Foster (DOB), J. Dougherty (OSC), Jacklin G. Pexton, District Superintendent

Introduction

Background

New York State’s issuance of Report Cards for school districts and Boards of Cooperative Educational Services (BOCES) has turned public and legislative attention to student data. Chapter 436 of the Laws of 1997 made BOCES Report Cards available to the public on April 16, 1999. Graphically presented, the Report Cards summarize program accomplishments and services BOCES provide for children and adults.

In addition, Chapter 602 of the Laws of 1994 added Section 215-b to the Education Law to require the Commissioner of Education to prepare and submit to the Governor, the President Pro Tem of the Senate, and the Speaker of the Assembly, an annual report beginning January 1, 1996. The Chapter 602 Report details certain financial and statistical outcomes of BOCES, tuition costs for selected programs, per pupil cost information and aggregate expenditure data for BOCES’ administrative, capital and service functions. The Chapter 602 Report includes changes from the year prior to the report year for all data.

BOCES are organized under Section 1950 of the Education Law. Chapter 474 of the Laws of 1996 amended Section 305 of the Education Law to require the New York State Education Department (Department) to perform fiscal audits of BOCES at least once every three years.

Madison-Oneida BOCES is headquartered in Verona, New York and serves nine component districts which have enrollments of more than 19,000 students. Madison-Oneida BOCES ranked 20th largest in the State, in terms of total general fund expenditures, for the 1998-99 school year.

Objectives, Scope and Methodology

Pursuant to Sections 305 and 190 of the Education Law, we audited management practices, records and documentation related to the data contained in the BOCES Report Card and the Chapter 602 Report and the Employment Preparation Education (EPE) Program for the period July 1, 1998 through June 30, 1999. We followed up on the status of prior recommendations made in audit report number BOC–1296-6. The objectives were to:

· Evaluate the adequacy of management controls over data reported to the Department and obtain reasonable assurance that the data are valid and reliable.

· Determine how BOCES use data to monitor the performance of the districts within their supervisory district.

· Determine how BOCES use data to monitor student outcomes.

· Evaluate the wide ranges of costs identified in the Chapter 602 Report and understand the reasons for the variances.

· Determine if Employment Preparation Education (EPE) claims are adequately documented.

· Follow up on the findings and recommendations from the previous audit and determine whether timely and adequate corrective actions were implemented.

To accomplish our objectives, we reviewed applicable laws, regulations, policies and procedures; interviewed Department and BOCES management and staff; examined records and supporting documentation; sampled transactions on a non-statistical basis; and reviewed Madison-Oneida BOCES’ audited financial statements.

We conducted the audit in accordance with Government Auditing Standards issued by the Comptroller General of the United States. An audit includes examining, on a test basis, evidence supporting records and applying other audit procedures considered necessary in the circumstances. An audit also includes assessing the estimates, judgments and decisions made by management. We believe that the audit provides a reasonable basis for our findings, conclusions, and recommendations.

Comments of Madison-Oneida BOCES Officials

Madison-Oneida BOCES officials generally agreed with the recommendations contained in this report. Their final comments are included as Appendix B to this report.

Employment Preparation Education

Madison-Oneida BOCES operates an Employment Preparation Education (EPE) Program. This categorical aid program serves students 21 years of age or older who have not received a high school or equivalency diploma. EPE aid is generated by reporting contact hours and student enrollment on EPE State Aid Claim Forms SA-160.1 and SA-160.2. Section 168.5 of the Regulations states that BOCES are required to maintain appropriate attendance records to support contact hours reported on Form SA-160B.

Part 168.4 of the Regulations of the Commissioner of Education (Regulations) states that EPE Program funds may be spent for personal services, employee benefits, equipment, supplies and materials, contractual services, travel expenditures, staff development and training, and other expenditures approved by the Commissioner. These expenditures are to be used only for EPE Program purposes.

Madison-Oneida BOCES received a total of $840,722 in EPE aid for the period July 1, 1998 through June 30, 1999, based on reported contact hours. Education Law 3602 states that when total revenue received exceeds the entire cost of such program, State aid payable in the following year will be reduced by the amount of such excess. This means that Madison-Oneida BOCES must refund the larger of revenues disallowed or expenditures disallowed, but not both. The audit report will be used by the Department to adjust future aid received by Madison-Oneida BOCES.

The audit found that Madison-Oneida BOCES had no written policies and procedures for the recording and maintenance of EPE attendance. Without adequate attendance documentation, the BOCES and the audit have less assurance that it is properly reporting and claiming EPE contact hours. The audit found 1,630 contact hours ineligible for State aid which totals $7,806 in EPE aid (see Attachment 1). Madison-Oneida BOCES was asked to recalculate the EPE contact hours for Non-Traditional EPE programs using Department guidelines and submit them with the response to the Preliminary Findings Report. However, Madison-Oneida BOCES did not provide this recalculation. This information is being referred to the Department’s EPE office for follow-up as deemed appropriate.

Contact Hour Documentation

To ensure that EPE revenues paid are appropriate, the number of reported contact hours must be clearly documented. Any undocumented or overstated contact hours will be questioned upon audit and revenues will be reduced accordingly. A BOCES must maintain classroom attendance rosters of all students who attend EPE programs. Documentation must clearly support reported contact hours and compliance with requirements regarding maximum class size (20) and the maximum number of class hours per week (20). All variances must be approved annually in writing by the Department’s Office of Workforce Preparation and Continuing Education (OWPCE).

Part 168.2 of the Regulations of the Commissioner of Education (Regulations) states that a contact hour for EPE means 60 minutes of instruction given by a teacher in approved program component areas.

The audit reviewed EPE attendance documentation for the month of April 1999 and for the 1998-1999 school year for a sample of 20 students. The audit found the documentation maintained for EPE contact hours was not always adequate, consistent, and/or complete. For example, necessary information was not always recorded on supporting documentation, some original attendance records were not maintained, and in several instances the teachers incorrectly added up contact hours.

Below is a summary of the EPE contact hour adjustments for the sample based on the conditions found:

	SA-160.1	SA-160.2	Total	EPE Aid Based on Hours
Claimed	8,049	8,842	16,891	$80,908
Verified by audit	7,547	8,574	16,121	77,222
Difference	502	268	770	$3,686

Source: BOCES records and audit workpapers. [See Attachment 1 for a summary of all adjustments to claimed EPE contact hours.]

Work Experience Contact Hours

According to the instructions included with the 1998-99 EPE State Aid Program (Continuation Only) application for the Basic Work Experience Program Model, total program hours equal classroom instruction hours plus Work Experience hours. (Classroom instruction must comprise 30 percent of total program hours.)

Though Madison-Oneida BOCES did not have a Basic Program Model the audit used this formula for the Community Work Experience Program (CWEP) they operated.

The Madison-Oneida BOCES did not always provide classroom instruction that represented 30 percent of total program hours for Work Experience hours claimed. They did not appropriately prorate the Work Experience hours claimed that should have been prorated. The audit did not note any instances of on-site visits for the students in the sample mentioned above where Work Experience contact hours were claimed. The audit found hours claimed after six months for the Work Experience programs where participation is limited to six months.

Based on the conditions found, the audit made the following adjustments to claimed EPE Work Experience contact hours.

The audit disallowed 860 contact hours for Work Experience equaling $4,120 in total EPE aid to be refunded. The audit found that all but nine of the hours disallowed based on the 30 percent rule, were due to one class (WEJ570). This class is for students in prison and Madison-Oneida BOCES claimed these hours for six students.

For these six students, Madison-Oneida BOCES claimed 1,855 program hours, 271 were non-Work Experience program hours and 1,584 were Work Experience hours. For three of the six students, Madison-Oneida BOCES did not claim any non-Work Experience program hours. For the remaining three, they claimed very few non-Work Experience program hours. See Attachment 1 for a summary of all adjustments to claimed EPE contact hours.

Non-Traditional EPE Contact Hours Were Not Correctly Calculated

Contact hours for non-traditional programs are based on professional staff hours expended and number of active enrollees. For each person actively enrolled, providers are limited to no more than 30 minutes (.5 hour) per week of professional staff time.

To document the number of actively enrolled students, teachers are required to maintain program logs/records and student folders of work. Active enrollment for programs is defined as a log record showing a contact within a certain period. Contacts may be in person, by telephone, or by submission of completed work packets depending on the type of program. For packet-based programs like Giving Rural Adults a Study Program (GRASP), the standard contact period is four weeks. An active student is defined as someone who receives and returns a packet of work which represents 12 hours of student work every two weeks.

It has become an accepted practice of using the number of packets to generate contact hours instead of active enrollment in packet-based programs. However, BOCES are still required to compare the number of packets to the number of hours of professional staff time and using the lesser of the two amounts to claim contact hours.

For the first two packets handed out, Madison-Oneida BOCES may claim 12 hours for each packet whether or not the packets are returned. For all s