Introduction

Background

Public and legislative attention has been turned to data provided by Boards of Cooperative Educational Services (BOCES) and school districts with the issuance of Report Cards. 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 also includes changes from the year previous 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.

Monroe 2-Orleans BOCES is headquartered in Spencerport, New York and serves nine component districts which have enrollments of more than 48,000 students. Monroe 2-Orleans BOCES ranked 18th largest in the State, in terms of total fund expenditures, for the 2000-01 school year.

Objective, Scope and Methodology

Pursuant to Sections 305 and 1950 of the Education Law, we audited management practices, records, and documentation related to the data contained in the 1999-2000 BOCES Report Card and the Chapter 602 Report for the period July 1, 1999 through June 30, 2000, and we followed up on the status of previous recommendations made in audit report number BOC–0896-1. We also reviewed the Employment Preparation Education (EPE) Program for the period July 1, 1999 through June 30, 2000. 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 schools within its supervisory district.

· determine how BOCES use data to monitor student outcomes.

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

· determine if EPE claims are adequately documented.

· follow up on the findings and recommendations from the previous audit to 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 Monroe 2-Orleans 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 Monroe 2-Orleans BOCES Officials

Monroe 2-Orleans BOCES officials generally agreed with the matters contained in this report and their comments have been included where appropriate. They requested that their written response to the preliminary audit findings be included as Appendix B to this report.

Report Card

The Report Cards, required by Chapter 436 of the Laws of 1997, were made available to the public on April 16, 1999. Graphically presented, the Report Cards summarize program accomplishments and services BOCES provide for children and adults. They are intended to be used as a tool for the continuous improvement of BOCES programs and services and for providing information to communities.

The Report Card displays the following programs and services: Career/Occupational Education, Alternative Education, Adult Education, Special Education, Curriculum and Professional Development, Technology, the State Testing Program, and the 1997-98 Expended Budget. The State Testing figures are provided by the Department, not BOCES, so those figures were not included in the scope of the audit.

An objective of this audit was to determine the accuracy of the Report Card data and the adequacy of the supporting documentation. Overall, the Report Card data were reasonably accurate.

Report Card Dissemination

Beginning with the Report Card for the 1997-98 school year, the board of cooperative educational services (BOCES)…"shall make it publicly available by transmitting it to local newspapers of general circulation, appending it to copies of the proposed administrative budget made publicly available as required by law, making it available for distribution at the annual meeting, and otherwise disseminating it as required by the commissioner." Education Law Section 1950.4.kk.

Monroe 2-Orleans BOCES officials did not transmit their Report Card to local newspapers of general circulation and, therefore, are not in compliance with Education Law Section 1950.4.kk. Monroe 2-Orleans BOCES officials agree that the Report Card was not transmitted to local newspapers as they were unaware of this requirement. They state it will be transmitted in the future.

Recommendation

1. Ensure the BOCES Report Card is transmitted to the local newspaper.

Comments of Monroe 2-Orleans BOCES Officials

Monroe 2-Orleans BOCES officials concur with this recommendation.

Chapter 602 Report

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 report is also provided to all school districts and BOCES.

The 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. In accordance with the statute, the report is to include changes from the year prior to the report year for all data.

The report is compiled by the Department’s BOCES and School District Organization (BSDO) unit. The information used by BSDO comes primarily from the SA-111 and “Data Collection Forms” submitted by the BOCES.

Report Accuracy and Documentation

An objective of this audit was to determine the accuracy of the Chapter 602 Report data and the adequacy of the supporting documentation. The audit tested the Special Education - Related Services Section and determined the tuition rates were inaccurate.

Special Education Section:

Monroe 2-Orleans BOCES submits Data Collection Forms to the Department for the Chapter 602 Report. These forms specify the programs and the Criteria-Guideline numbers to be used for these programs when filling out the forms. However, Monroe 2-Orleans BOCES understated the tuition by including the refund in the net expenditures.

The Department requested information on the following programs:

Data Requested on the Data Collection Forms
Programs	Criteria-Guidelines	Class Type
Special Class Option II	4220	12:1:1
Special Class Option III	4230	6:1:1
Special Class Option IV	4240	12:1:3

- Special Class Option II

Monroe 2-Orleans BOCES’ methodology calculated a tuition rate of $12,873. The audit calculation was $13,999. Since Monroe 2-Orleans BOCES started its calculation using the overall costs and not the revenues, the subtraction of the surplus caused an understatement of the tuition. Monroe 2-Orleans BOCES correctly excluded related services but did not subtract the miscellaneous revenues. The audit added back the surpluses and subtracted the miscellaneous revenues.

- Special Class Option III

Monroe 2-Orleans BOCES’ methodology calculated a tuition rate of $12,915, which included Criteria-Guideline 4235. The audit calculated $13,647. In addition to the methodology explained above, the audit did not include Criteria-Guideline 4235, which is not reportable for the Chapter 602 Report.

- Special Class Option IV

Monroe 2-Orleans BOCES’ methodology calculated a tuition rate of $19,180 compared to the audit calculation of $19,636. The methodology was the same as for Option II.

The tuition rates for the special education options reported in the Chapter 602 Report for Monroe 2-Orleans BOCES are understated. Inaccurate tuition rates do not allow for meaningful comparisons among the BOCES.

Monroe 2-Orleans BOCES officials agree that the surplus should not have been subtracted from the net expenses to determine the Special Education Program Tuition Per Pupil for 1999-2000 for each option. They state the confusion came from the Chapter 602 Report Schedule B instructions which state “Subtract any refunds/surplus before calculating the rate.”

Recommendation

2. Ensure special education class tuition rates are calculated using the correct methodology.

Auditor’s Note

See Schedules A, B, and C for tables showing the audit calculations for the special education classes.

Comments of Monroe 2-Orleans BOCES Officials

Monroe 2-Orleans BOCES officials concur with this recommendation.

Employment Preparation Education (EPE)

Monroe 2-Orleans BOCES operates an EPE Program. This categorical aid program serves students 21 years of age or older who have not received a high school or equivalency diploma.

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.

Monroe 2-Orleans BOCES received a total of $1,099,751 in EPE aid for the period July 1, 1999 through June 30, 2000, based on reported contact hours. Education Law Section 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 Monroe 2-Orleans 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 Monroe 2-Orleans BOCES.

The audit found that Monroe 2-Orleans BOCES could not adequately support 13,980 contact hours for $62,629 in EPE Aid. However, as shown on Schedule 1, the EPE expenditures exceeded revenue by $35,232. Therefore, Monroe 2-Orleans BOCES only has to repay $27,397 in EPE aid.

Policies and Procedures Manual

Good business practice dictates that written policies and procedures be adopted for those services which are not covered by other general policies and procedures. This is especially true when there are specific requirements for providing these services and documenting that these services were provided.

These written policies and procedures would incorporate any laws, regulations, and manuals or other guidelines issued by the organization with oversight authority, the Department, as well as any policies and procedures that may be unique to the Department as they relate to these services.

The purpose of these written policies and procedures is to provide guidance to an organization’s staff to ensure that any laws, regulations, and manuals or other guidelines issued by the organization with oversight authority are adhered to.

Monroe 2-Orleans BOCES does not have written policies and procedures established for all aspects of the EPE Program. Without adequate written policies and procedures, the employees providing EPE services and accounting for EPE services provided do not have clear guidance, which has led to EPE inaccuracies. In addition, there is less assurance that Monroe 2-Orleans BOCES is adhering to applicable laws, regulations, and manuals or other guidelines issued by the Department.

Monroe 2-Orleans BOCES officials state they are establishing a comprehensive policy manual based on the draft policy manual they received from the Department in February 2002. They have also established a training schedule to ensure all staff members involved with EPE programs are trained on appropriate procedures and are aware of the manual and its uses.

Student Folders

Section 168.3 of the Regulations requires that every student in an EPE Program have an individual student folder that is easily accessible to the student and the teacher and includes information concerning registration, attendance, testing, and individual program needs. At a minimum, registration information must include the student’s name, class attendance, the student’s date of birth or age, and the student’s diploma status. Since 1995-1996, each folder is required to contain an Individual Education and Employment Preparation Plan (IEEPP).

The audit reviewed 56 student folders from different EPE sites operated by Monroe 2-Orleans BOCES and found the following:

1.) In 15 of the student folders, there was no evidence of testing (such as TABE scores) to assess the student’s academic grade level.

2.) Thirty-eight student folders did not contain any documentation describing the individual program needs of the student or an employment preparation plan for the student to follow.

3.) Diploma status was not noted in five folders. In two folders, there was no documentation indicating the student's age or date of birth. Therefore, the related contact hours are not eligible. The total number of contact hours claimed for these students is 842, or $3,772.16.

4.) In two instances, spouses were enrolled in the same program and Monroe 2-Orleans BOCES did not maintain separate folders or student logs for each spouse. The contact hours claimed for both were disallowed due to the lack of documentation indicating their diploma status in their folders. (Included in #3 above.)

Based on the above conditions, the audit disallowed 842 EPE contact hours, or $3,772.16 based on the EPE rate of $4.48. The EPE aid adjustment will be withheld from future EPE aid payments.

Monroe 2-Orleans BOCES officials state it is their policy to give the TABE test to all eligible students before enrolling them into the EPE Program. They have included this policy as part of their orientation process for new teachers and staff and established a new training schedule for all staff to reinforce this policy. One session has already been concluded. Additionally, they developed a new system of checks and balances for intake and assessment where supervisors check intake paperwork every two weeks.

Monroe 2-Orleans BOCES officials state they were not aware of the 1995 requirement for IEEPPS and do not believe that significant procedural requirements should be memo based for other than short term notices. The Department should formalize requirements in procedure documents.

Monroe 2-Orleans BOCES officials state they have included IEEPP information on their intake documentation and agree that they claimed contact hours for students who were ineligible for EPE aid. They also stated they usually maintain individual folders for every student enrolled in the EPE programs.

Contact Hours Claimed for Ineligible Students

Education Law Section 3602.24.a states the EPE program is for persons 21 years of age or older who have not received a high school or equivalency diploma.

Monroe 2-Orleans BOCES claimed contact hours for several students who had not reached the age of 21 as of the beginning of the 1999-2000 school year, and for three students who had been issued GEDs before or during the 1999-2000 school year, as summarized below.

EPE contact hours claimed for students less than 21 years of age	1,575.5
Audited contact hours: Hours generated after the student turned 21 years of age.	546.0
Audit adjustment in hours.	1,029.5
EPE contact hours claimed for students issued GEDs before or during 1999-2000	1,415.75
Audited hours (contact hours generated through eight weeks after student passed the GED).	1,058.5
Audit adjustment in hours.	357.25


Total adjustment in hours	1,386.75
EPE rate	$4.48
Total EPE aid disallowed for ineligible students	$6,212.64

Monroe 2-Orleans BOCES claimed contact hours for students that are not EPE-eligible. The total adjustment for students less than 21 years of age and students who were issued GEDs before or during 1999-2000 is $6,213.

Monroe 2-Orleans BOCES officials agree that they claimed EPE contact hours for students under the age of 21 and for students who were issued a GED. They state that clerical errors were made in inputting birthdates and they were unaware that these students had completed their GEDs.

Contact Hour Documentation

School districts and BOCES generate EPE aid by reporting contact hours and student enrollment on Forms SA-160.1 and SA-160.2, EPE State Aid Claim Form. Under Section 168.2 of the Regulations, a contact hour for EPE means 60 minutes of instruction given by a teacher in approved program component areas. The Department requires the number of reported contact hours to be clearly documented to ensure that EPE revenues paid to the districts or BOCES are appropriate. Any undocumented or overstated contact hours will be questioned upon audit and revenues will be reduced accordingly. The districts or BOCES must maintain classroom attendance rosters of all students who attend EPE programs.

The audit found that Monroe 2-Orleans BOCES' records did not always adequately document EPE contact hours, resulting in Monroe 2-Orleans BOCES making errors when calculating EPE contact hours. The audit found the following for EPE program activities:

- Life Management-Home Study. A sample of 11 students was selected in the non-traditional Life Management - Home Study program for which 2,043 total hours were claimed. Of this amount, 1,167 hours were disallowed due to inadequate maintenance of student logs. Some student logs showed no indication of any contact beyond sending out the first packet to the student, yet Monroe 2-Orleans BOCES claimed 204 hours for one particular student. The disallowance of 1,167 hours means that 57 percent of the total contacts were disallowed from this sample. Based on this percentage, the audit expanded the sample to include at least 50 percent of the 9,713 hours claimed. An additional 3,059 hours were tested revealing 1,991 disallowed hours making an error rate of almost 65 percent.

Recap of Combined Samples

		Contact Hours
Original Submission		9,713
Hours disallowed on other findings		989
Hours to be sampled		8,724


Sample One	2,043
Sample Two	3,059
		5,102
Percent sampled	5102/9713	52.5

Questioned Hours
Sample one	1,167
Sample two	1,991
Total Questioned Hours		3,158
Error rate in Sample	3158/8724	61.9
Error rate projected to Program population	.619X8724	5,400

With agreement from Monroe 2-Orleans BOCES, the audit projected this error rate to the total number of contact hours to establish what should be disallowed. The audit adjusted the disallowed hours to eliminate any duplication for students who are disallowed for other reasons such as being under the age of 21 or no indication of diploma status. The disallowed contact hours totaled 5,400 hours and total EPE aid that should be returned to the Department is $24,192, at the EPE rate of $4.48.

- GRASP. The audit selected a sample from the list of GRASP students. The audit was told by Monroe 2-Orleans BOCES officials that none of the student logs from the GRASP program could be located. They were lost when they moved from one building to another. Monroe 2-Orleans BOCES claimed 5,341 contact hours, which computes to a disallowance of $23,927.68. The audit disallowed all of the hours claimed in the GRASP Program.

- Crossroads Café. A sample of 29 students was selected for the Crossroads Café Program. Of the sample selected, Monroe 2-Orleans BOCES claimed 7,468 contact hours. The audit disallowed 916 hours. This calculates to a disallowance of $4,103.68 at the EPE rate of $4.48. Monroe 2-Orleans BOCES claimed 506 and 382 hours for two different students. The most that can be claimed for any student in a non-traditional program, such as Crossroads Café, is 312 contact hours in one year (6 hours per week multiplied by 52 weeks).

- Connect with English. A sample of five students was selected for the Connect with English class. Monroe 2-Orleans BOCES claimed 116 contact hours more than the student logs supported for four students and claimed 22 hours less than what the student logs supported for one student. The net adjustment is a disallowance of 94 hours, or $421.12.

Because adequate documentation was not maintained in the student logs for the Life Management - Home Study program, and there were no student logs for the GRASP program, Monroe 2-Orleans BOCES is not in compliance with Department guidelines. Therefore, Monroe 2-Orleans BOCES and the Department have little assurance that EPE contact hours are being properly reported and claimed. EPE contact hours were reduced by 11,751 resulting in a disallowance of $52,644.48 in EPE aid.

Monroe 2-Orleans BOCES officials agree that there were occasions when they did not always maintain adequate documentation in the student logs to support EPE contact hours claimed.

Program Approval Requirements

Section 168.3 of the Regulations requires that each BOCES intending to operate an EPE Program submit to the Department a comprehensive plan of service application for approval.

Monroe 2-Orleans BOCES did not have prior Department approval to offer a citizenship program that was operating during the 1999-2000 school year. The first time that Monroe 2-Orleans BOCES obtained Department approval to offer citizenship was not until the 2000-01 school year. Monroe 2-Orleans BOCES claimed EPE aid for the citizenship program offered in the 1999-2000 school year in the amount of 257 hours, or $1,151.36 at the EPE rate of $4.48. The Office of Workforce Preparation has indicated that they would be willing to approve the program retroactively to eliminate any disallowance.

Monroe 2-Orleans BOCES officials believed they had received verbal approval to operate this program. They inadvertently overlooked the follow-up written approval and appreciate the retroactive approval. In the future, they will seek the Department's approval for all EPE programs and keep the approval on file.

Recommendations

3. Establish a comprehensive policy manual.

4. Ensure all testing documentation and IEEPPs are included in student folders.

5. Ensure only eligible students’ contact hours are claimed.

Executive Summary

Background and Scope of the Audit

Audit Results

Table of Contents

Introduction

Background

Objective, Scope and Methodology

Comments of Monroe 2-Orleans BOCES Officials

Report Card

Report Card Dissemination

Recommendation

Comments of Monroe 2-Orleans BOCES Officials

Chapter 602 Report

Report Accuracy and Documentation

Recommendation

Auditor’s Note

Comments of Monroe 2-Orleans BOCES Officials

Employment Preparation Education (EPE)

Policies and Procedures Manual

Student Folders

Contact Hours Claimed for Ineligible Students

Contact Hour Documentation

Program Approval Requirements

Recommendations