The Town did not have a written agreement or basis for rates charged to the Department of Corrections and Community Supervision (DOCCS) for sewer services and it charged sewer district (District) users more than was necessary. District users, including outside users, paid $2.1 million more than the total expenditures. Charges to DOCCS alone exceeded expenditures by $1.4 million. In addition, the District had an excessive fund balance of $4.4 million as of December 31, 2017 or a balance in excess of 844 percent of the District's average annual expenditures.

While School officials adopted adequate credit card purchasing procedures, these procedures were not always followed. We reviewed all 316 credit card transactions totaling $37,183 during our audit period for the School's four credit cards. We found that 75 transactions totaling $11,575 had documentation to support the purchase that did not contain an explanation for the purpose of the purchase, eight transactions totaling $1,366 lacked itemized receipts and 16 transactions totaling $2,012 had no supporting documentation. For the 99 credit card transactions totaling $14,593 (40 percent) with inadequate support, we determined that 89 transactions totaling $14,327 were for appropriate purposes. However, we were unable to determine whether the remaining 10 transactions totaling $265 were for appropriate purposes because appropriate supporting documentation was not maintained.

Officials did not establish adequate policies or procedures for collecting, recording, safeguarding and depositing cash receipts. While some departments had informal write-ups describing their cash receipts process, they were not detailed or uniform among departments and were not distributed citywide. The Clerk's office forfeited 30 percent of its revenues ($17,241) collected from credit card payments due to the credit card vendor improperly withholding funds. Inadequately segregated duties caused an opportunity for theft of ice rink collections totaling $5,364. Of the 11 marina deposits we reviewed, we found that two should have included $160 in cash that was collected but not deposited. The Clerk did not remit all revenues collected to the finance department, which contributed to the Clerk's excessive bank balance of $23,309 as of June 30, 2017. Although the City implemented a point-of-sale system specific for parks and recreation usage, the rifle range was the only parks department that used it to process all collections. The City's cash collection function was decentralized. Cash receipts were collected at as many as 20 different locations and up to 11 different financial applications were used to record collections. Cash collected in the cashier's office, parks department and the Clerk's office was not recorded in a timely manner. Finally, cash was not deposited for as many as 93 days after being collected.

The Program Coordinator (Coordinator), who deposited receipts for the 2018 Program, did not deposit all funds intact. The Coordinator held cash to pay vendors and reimburse staff who purchased incidentals for the Program. Officials did not require the use of press-numbered duplicate receipts for cash collections and perform an independent reconciliation of field trip collections to the amounts deposited. Furthermore, records were missing, which prevented us from determining whether the daily attendance and collection worksheets supported the collection totals listed on the daily cash envelopes. We also found that payments made to a movie theater totaling $4,730 were not documented. These payments were made in cash and no receipts were provided at the time of service. Officials did not ensure that money received for the Program was properly recorded, reported and disbursed. In addition, officials provided no oversight or monitoring of Program activities and the Coordinator did not submit any financial reports to the Board other than attendance counts.

Although the purchase of property for historical preservation is legally allowed, Town officials did not use a thorough process. Town officials expended $361,000 acquiring property for historical preservation. Using the assessed value from July 1, 2012 and the equalization rate at the time of 80 percent, we calculated the property's full market value at the time of purchase was approximately $243,000, or $118,000 less than the price paid by the Town. The Supervisor told us that the Town purchased the building to ensure the building's historic preservation and provide economic development for the Town/Village Main Street. The Board and Supervisor told us that they planned to retain the undeveloped acreage, which includes a baseball field. Officials obtained a $200,000 grant to create a public trail from the Village to a nearby creek and surrounding land. The land associated with the building has also been designated for a waterfront revitalization program, which is a land and water use plan that will allow for waterfront development through application of grant funding.

The Board has not developed comprehensive written multiyear financial and capital plans or a fund balance and reserve policy. Although the Board prepared an informal capital purchase plan, it did not contain a detailed description of all capital projects for a six-year period, estimated cost, proposed method of financing, priority of projects and an estimate of effect on annual operating costs. Without comprehensive plans, the Board cannot assess expenditure commitments, revenue trends, financial risks and the affordability of new services and capital investments.

School officials did not review tuition billing prepared by the School's contracted accounting firm. An incorrect formula was used to calculate State aid attributable to special education students, resulting in one district of residence being overbilled by more than $161,000 in the 2018-19 school year. In addition, School officials did not obtain the required residency documentation for 54 out of 55 students in our audit sample. We found that exceptions occurred because School officials have not been enforcing their enrollment requirement for proof of residency and do not have a procedure in place to request updates in subsequent years.

District officials did not have documentation that they were only paying for transportation for students that lived in the District. We requested documentation for 300 students. The documentation for 93 of these students was missing and we found deficiencies such as no proof of address for 54 of the 193 new student's applications and no proof of birthdate for 15 students. For 2017-18, the District paid 15 schools to use private contractors on a per-student basis to transport 717 (or $495,499) more students than were registered. For 2018-19, as of April 1, 2019, the District is paying 23 schools to transport 455 (or $337,085) more students than registered. When student records are not accurate and consistent from report to report, there is an increased risk that the District will pay for students who are not eligible or do not existent.

Officials maintained the District's operating funds at one financial institution. During the audit period, operating funds were deposited in three interest-bearing checking accounts with a monthly interest rate of .1 percent. The average amount of available funds for investment for the tax collection account was $957,676 and the operating account was $435,461. The District realized interest earnings related to its operating funds of $3,072 during the audit period. We found that officials could have invested available operating funds averaging approximately $1.4 million in another financial institution with available interest rates between .80 percent and 2.31 percent or an average interest rate of 1.7 percent during the audit period. If officials had invested available funds in this financial institution, interest earnings could have been increased by $45,330 for the audit period.

Payroll calculation errors cost the District $3,638 and errors totaling $9,100 occurred with manual leave accrual entries. In addition, five employees had 21 time sheets lacking proper approvals and two employees had eight time sheets that were missing. Furthermore, the former payroll supervisor worked overtime hours that were not supported. Also, she did not record taking a lunch break on 297 of 315 days, resulting in overtime or extra pay. Finally, we found that errors occurred in the leave records maintained for 13 of the 26 (50 percent) employees tested.

The City's proposed budget includes appropriations of $68,298,071. The proposed water fund budget includes $5.1 million in metered water sales revenue, which appears reasonable, pending Board approval of water rate increases. Budgeted overtime funding for police ($1.1 million) and firefighters ($800,000) is likely underestimated by a total of at least $910,000. The budgeted $565,000 in severance payments does not include appropriations for budgeted layoffs in 2019, and may not be sufficient if the layoffs do not take place until 2020. The budgeted $50,000 for unemployment insurance may be underestimated by up to $291,000, based on proposed layoffs. The proposed $581,000 in contingency appropriations may not cover unexpected expenses if these funds are used to pay underestimated police and overtime costs. Under the proposed 2020 budget, the City will exceed its Constitutional Tax Limit (CTL); however, City officials indicated they decreased the levy to be within the limit. The City faces potential increased salary costs when its collective bargaining agreement (CBA) with the International Association of Fire Fighters, which expired in 2017, is settled

The Board did not always adopt reasonable budget estimates. The Board overestimated expenditures by $8 million (8 percent) in 2016-17, resulting in an operating surplus of more than $6.2 million. Because District officials did not use historical trends to develop the budgets and instead relied on budget transfers, District officials made excessive adjustments to the budget, especially in the last five years when the budgets were adjusted on average of 12 percent. The District had unrestricted funds totaling $10.6 million and $12 million at the end of 2016-17 and 2017-18, respectively, which exceeded the statutory limits of $3.9 million and $4 million.

The significant revenue and expenditure projections in the proposed budget are reasonable. The County's proposed budget includes a tax levy of $142,186,245.

Based on the results of our review, we found that the significant revenue and expenditure projections in the tentative budget are reasonable. The Town's 2020 tentative budget includes a proposed tax levy of $58,426,602.

Based on the results of our review, except for certain matters, we found that the significant revenue and expenditure projections in the proposed budget appear reasonable. The City did not appropriate any fund balance as a financing source in the 2020 general, water, sewer or refuse fund budgets. The City's draft audited financial statements reported that as of December 31, 2018, unrestricted fund balance in the general, water, sewer and refuse funds were approximately 20.2 percent, 46.5 percent, 26.6 percent, and 30.3 percent, respectively, of the following year's budgeted appropriations. City officials told us they are nearing a settlement on two tentative collective bargaining agreements (CBAs), therefore it is likely these CBAs will be in place in 2020 and the Common Council and City officials should budget accordingly. The Common Council also needs to consider whether the contingency appropriations are adequate if arbitration appeals are settled and unanticipated retirements occur. Finally, the proposed budget includes a tax levy of $13,044,260 which is the maximum levy that the City can impose without the Common Council needing to override the tax levy limit.

District officials could improve their management of the District's financial condition. We found officials overestimated appropriations by a total of $7.1 million from 2015-16 through 2017-18, which resulted in most of the appropriated fund balance not being needed to fund operations. The tax certiorari reserve was overfunded by $963,200 (615 percent) as of June 30, 2018. In addition, encumbrances were overstated by a combined total of $264,000 from 2015-16 through 2017-18. Finally, although surplus fund balance was reported at or below the statutory limit from 2015-16 through 2017-18, recalculated surplus fund balance exceeded the statutory limit ranging from 7.2 percent to 10.9 percent.

Significant revenue and expenditure projections in the proposed budget are reasonable. However, while the estimated revenues for the proposed refuse fund budget appear reasonable, they include $250,000 in estimated revenues for fees that the City has not previously assessed. Also, the minimal contingency appropriation in the proposed refuse fund budget provides the City with a limited amount of flexibility in the event of unforeseen circumstances that may require additional funds. The City's capital plan for the purchase of equipment and vehicles for the general and refuse funds remains unfunded through the proposed budget and instead will be financed by issuing debt. In addition, one of the City's collective bargaining agreements (CBA) is expired and the City faces potential significant increased salary and wage costs in the event that the CBA is settled in 2020. Finally, the City's proposed budget includes a tax levy of $26,304,399.

The Board properly evaluated projects prior to approving financial benefits. However, the Board could improve its monitoring and verification of project performance related to job creation and capital investment. For example, although the payroll tax forms submitted by five of 27 companies did not support their employment reports, OCIDA officials did not request additional information to verify the employment information. In addition, OCIDA does not require companies to provide periodic progress reports or other documentation to evidence their actual capital investments. We also found that four companies received sales tax exemptions that exceeded approved amounts by a total of $173,446. Of this amount, officials properly recaptured $97,020 from one company.

The District incurred operating deficits in two of the last three fiscal years, resulting in a $12.3 million (20 percent) decrease in total fund balance − from $60.3 million as of June 30, 2017 to $48 million as of June 30, 2019. This was due, in large part, to use of approximately $10.5 million in fund balance to retire debt in 2017-18. Approximately $36.5 million of fund balance was restricted in reserve funds as of June 30, 2019. However, approximately $8 million was unassigned fund balance. This is equivalent to 4.1 percent of the next year's budget, which is still slightly above the statutory limit. Despite incurring operating deficits, the District annually adopted budgets that overestimated expenditures by $1.8 million to $8.3 million and underestimated revenues by $1.8 million to $6 million. While unanticipated State aid generally accounted for revenue variances, employee benefits represented the largest portion of overestimated appropriations. Finally, the Board has not adopted a reserve fund policy or created a formal written plan to govern the funding and use of reserves. The Board generally reviews the District's reserves annually. However, we question the need for the insurance reserve totaling $371,333 as of June 30, 2019, as the District has insurance coverage for known risks.

The Board did not properly establish reserves or establish a reserve fund policy. In addition, the Board did not ensure that fire protection contracts were signed, that the services provided were billed for and that the costs of services were equitably allocated between service areas. The District provides fire protection services to the Town, funded by real property taxes, and to the Town of Roseboom and portions of the Town of Middlefield, funded by fire protection contractual agreements totaling $10,075 for 2018. As of March 31, 2019, the District had not received payments for 2017, 2018 or 2019 from the Town of Middlefield totaling $3,225 because District officials failed to bill the Town. Furthermore, the Board did not ensure the Annual Update Documents (AUDs), which are the Annual Financial Reports, are completed and submitted to our office. Finally, the Board did not annually audit the Treasurer's records.