Executive Summary

Background and Scope of the Audit

Ontario-Seneca-Wayne-Yates (Wayne-Finger Lakes) BOCES ranked as the 10th largest BOCES in the State, in terms of total general fund expenditures, for the 1999-2000 school year.

The audit examined management practices, records and documentation related to summarizing and reporting data used in the BOCES Report Card and the Chapter 602 Report for the period July 1, 1998 through June 30, 2000. The Employment Preparation Education (EPE) Program was reviewed for the 1998-99 and 1999-2000 school years. This audit also followed up on findings and recommendations from the previous audit. 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; and to evaluate the wide ranges of costs identified in the Chapter 602 Report and understand the reasons for the variances.

Audit Results

Presented below is a summary of the significant audit findings developed in response to the audit’s objectives.

· Report Card data were reasonably acccurate. (pages 3-4)

· EPE contact hours were overstated by 45,794 hours for a net total of $38,768 in excess EPE aid for the 1998-99 school year. (pages 6-12)

· Opportunities exist for improving management processes pertaining to safeguarding assets, segregating duties, bank reconciliations, and compensating controls. (pages 13-15)

Introduction..................................................................................................................................................... 1

Background.................................................................................................................................................... 1

Objectives, Scope and Methodology................................................................................................ 1

Comments of Wayne-Finger Lakes BOCES Officials.................................................................. 2

Report Card........................................................................................................................................................ 3

Minor Problems Were Found With Supporting Documentation...................................... 3

Professional Development............................................................................................................................. 3

Recommendation.......................................................................................................................................... 4

Comments of Wayne-Finger Lakes BOCES Officials.................................................................. 4

Chapter 602 Report........................................................................................................................................ 5

Report Accuracy and Documentation............................................................................................ 5

Employment Preparation Education (EPE) Program........................................................... 6

Reported Contact Hours Included Undocumented Hours................................................ 6

Non-traditional Programs............................................................................................................................. 8

Traditional Programs..................................................................................................................................... 9

Reported Contact Hours Included Ineligible Students.................................................... 10

GED on TV, Life Skills – Home Study Are Not Following the Approved Program Models.............................................................................................................................................................. 10

Recommendations..................................................................................................................................... 11

Comments of Wayne-Finger Lakes BOCES Officials............................................................... 11

Opportunities to Improve Management Processes............................................................ 12

Internal Controls Could Be Improved........................................................................................ 12

Safeguarding Assets..................................................................................................................................... 12

Segregation of Duties................................................................................................................................... 12

Bank Reconciliations.................................................................................................................................... 13

Compensating Controls............................................................................................................................... 13

Recommendations..................................................................................................................................... 14

Comments of Wayne-Finger Lakes BOCES Officials............................................................... 14

Data Collection and Use......................................................................................................................... 15

Follow Up – Recommendation Implementation Plan........................................................ 17

Schedule 1 – Summary of Questioned Contact Hours

Schedule 2 – Lease Agreements Without New Provision

Appendix A – Contributors to the Report

Appendix B – Comments of Wayne-Finger Lakes BOCES Officials

Appendix C – Audit Review Proceedings

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 the New York State BOCES Report Cards (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 report is to include 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.

Ontario-Seneca-Wayne-Yates (Wayne-Finger Lakes) BOCES is headquartered in Newark, New York and serves 25 component districts with enrollments of more than 44,000 students. Wayne-Finger Lakes BOCES ranked 10th largest in the State, in terms of total fund expenditures, for the 1999-2000 school year.

Objectives, 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 Report Card and the Chapter 602 Report for the period July 1, 1998 through June 30, 2000. We followed up on the status of the prior recommendations made in audit report number BOC–0297-9 and reviewed the Employment Preparation Education (EPE) Program for the period July 1, 1998 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 districts within its 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 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 Wayne-Finger Lakes BOCES management and staff; examined records and supporting documentation; sampled transactions on a non-statistical basis; and reviewed Wayne-Finger Lakes 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 Wayne-Finger Lakes BOCES Officials

Wayne-Finger Lakes 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

New York State’s Board of Cooperative Educational Services Report Cards (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. Data included in the Report Cards must be valid and reliable in order to be used effectively and BOCES officials are given the opportunity to review the Report Card prior to its release.

The Report Card reports on 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 1996-97 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.

Minor Problems Were Found With Supporting Documentation

An objective of this audit was to determine the accuracy of the Report Card data and the adequacy of the supporting documentation. The audit noted only one area where Report Card data were not accurate or did not have supporting documentation: Professional Development. Overall, the Report Card data were reasonably accurate; however, the following minor differences were noted.

Professional Development

In the Professional Development section of the Report Card, attendance statistics are cited for the number of professional staff who were served. The audit requested attendance lists for a sample of the training courses provided and found that two courses did not have attendance lists for a small percentage of the professional staff served.

Wayne-Finger Lakes BOCES officials expressed a concern about double-counting attendance. A BOCES sponsoring a workshop could report the attendance on its Report Card, while another BOCES that made the presentation might report that same attendance on its own Report Card.

As a result of Wayne-Finger Lakes BOCES’ Professional Development statistics not being fully documented, there is a possibility that the number of professional staff served is inaccurate, at least for courses dealing with Institutional Strategies and Learning Standards. However, due to the low percent of undocumented attendance, the impact on the accuracy of the Report Card would probably not be material. In addition, the likelihood of double-counting the same professional staff is difficult to assess without knowing how often two BOCES are involved in the same training course.

Wayne-Finger Lakes BOCES officials agree that there were no attendance lists for a small percentage of professional staff served. They are having a consultant programmer design a comprehensive tracking and registration program which helps double check the reporting of numbers.

Recommendation

1. Ensure that all professional staff are accurately counted in the Professional Development statistics.

Comments of Wayne-Finger Lakes BOCES Officials

Wayne-Finger Lakes 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 (Chapter 602 Report) beginning January 1, 1996. The report is also provided to all school districts and BOCES.

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

Report Accuracy and Documentation

An objective of the audit was to determine the accuracy of the Chapter 602 Report data, the adequacy of the supporting documentation, and to evaluate variances with statewide averages.

The audit compared the Chapter 602 Report data to the data in the Annual Financial and Statistical Reports of BOCES (SA-111), and found no major differences. Supporting documentation was adequate and there were no major variances with statewide averages.

Employment Preparation Education (EPE) Program

Wayne-Finger Lakes 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.

Wayne-Finger Lakes BOCES received a total of $201,039 in EPE aid for the period July 1, 1998 through June 30, 1999, 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 Wayne-Finger Lakes 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 Wayne-Finger Lakes BOCES.

The audit found that Wayne-Finger Lakes BOCES claimed 44,817 contact hours for students in non-traditional programs that could not be adequately documented, and overstated contact hours by 977 due to clerical errors. The total net EPE aid ineligible for 1998-99 amounts to $38,768 (see Chart 3 page 10).

Reported Contact Hours Included Undocumented Hours

EPE programs may also include non-traditional modes of instruction. These programs are defined as external high school diploma programs, correspondence programs, televised general educational development programs, and other such EPE programs that are not conducted in regular classrooms during a regular school day as may be approved by the Commissioner. Part 168.5 of the Regulations states that EPE aid is payable based on the number of hours of instruction, which shall be calculated by multiplying the number of teacher hours for such programs by 12. The Department established guidelines for non-traditional programs by defining active enrollment for nontraditional classes like Giving Rural Adults a Study Program (GRASP), GED on TV/Learn to Read, and External High School Diploma Program (EDP).

To ensure that EPE revenues paid to the district or BOCES are appropriate, contact hours must be documented and provided to eligible students. Otherwise, such contact hours will be questioned upon audit and revenues will be reduced accordingly. Documentation for traditional programs is typically a student attendance roster. For non-traditional programs, active enrollment is defined as a log record showing a contact within a certain period. Contacts may be in person, by phone, or by submission of completed work packets depending on the type of program involved. For example, GRASP involves work packets while GED on TV uses phone contacts.

The GED on TV Program Implementation Manual states that EPE fundable contacts are determined by:

1. A telephone call from the tutor to the student which verifies the program content the student is working on;

2. Recording the content, date and time of the call on the log sheet. Page references are helpful, but not required. Use of supplementary material, visits to a class for help, and/or questions the student raises are entered in the log. Dates of practice tests, book completion, etc., should be entered. The log must be clear enough to allow another tutor to assist the student if necessary; and

3. Recording a check mark in the attendance register for each completed phone call (Ö).

Wayne-Finger Lakes BOCES has experienced a very large growth in EPE hours, especially in non-traditional programs. Total EPE hours have increased from 133,830 in 1995-96 to 215,470 in 1998-99 – a 61 percent growth in three years. Non-traditional contact hours have increased at an even greater pace – more than 126 percent in three years. See Chart 1 page 8.

Chart 1 Wayne-Finger Lakes BOCES Change in Contact Hours 1995-96 to 1998-99
	1995-96 Total	% of Total	1998-99 Total	% of Total	% of Total Increase (Decrease)
Traditional	48,957	36.6	41,012	19.0	-16.2
Non-traditional	69,067	51.6	156,469	72.6	126.5
Adult Occ. Ed.	15,806	11.8	17,989	8.3	13.8
	133,830	100.0	215,470	100.0	61.0

Wayne-Finger Lakes BOCES’ non-traditional program accounted for nearly 73 percent of the total contact hours in 1998-99, compared to almost 52 percent in 1995-96. As a result, the audit focused mainly on non-traditional program contact hour documentation, although some traditional programs were reviewed as well. Most of the non-traditional programs involved phone contacts, although there was also a GRASP program. See Chart 2.

Non-traditional Programs

Chart 2 Wayne-Finger Lakes BOCES Non-traditional Program Contact Hours 1998-99
Program	Contact Hours	% of Total	Documentation	Error Rates
Another Page	7,986	5.1	Phone Logs	13%
Citizenship	6,294	4.0	Phone Logs	6%
Crossroads Café	11,435	7.3	Phone Logs	19%
Even Start	1,772	1.1	Phone Logs	92%
GED on TV	34,170	21.8	Phone Logs	31%
Learn to Read	2,424	1.5	Phone Logs	5%
Life Skills - Home Study	38,998	24.9	Phone Logs	49%
Math Basics	24,652	15.8	Phone Logs	30%
GRASP	28,738	18.4	Work Packets	5%
Total	156,469	100.0

The audit had several concerns with phone logs, mostly due to a lack of detail regarding the program content the student was working on. Log entries were very short (i.e., many identical entries such as “working on fractions” or “newsletter”). There was little information about how well the student was doing and many log entries addressed only personal matters. A sample of these phone log