Published: November 09, 2008 01:45 am      

FALLS SCHOOLS SERIES: Audit deja vu

When the Niagara Falls City School District was slammed by state Comptroller Thomas DiNapoli’s Office four weeks ago for “failing to protect the taxpayers” and allowing 33 areas of misfeasance, school board members told the Niagara Gazette they didn’t know the district’s finances had gotten so out of hand.

But it wasn’t their first warning that problems existed.

In 2004, the state Education Department’s Office of Audit Services investigated the school district and found, in some cases, the exact same problems DiNapoli’s office highlighted four and a half years later.

While much less harsh on the district than DiNapoli and, at times, complimentary, the state Education Department’s audit specifically pinpointed the district’s credit card policies and purchasing procedures as being deficient. The department’s auditors found some purchases were not authorized by district administrators, lacked proper documentation and violated the district’s own policy of a $150 per diem maximum allowance.

“District administrators made charges that are not related to conference, mileage or other reimbursable expenses in performance of day-to-day duties,” the department’s audit said, including “gifts for employees” and “membership fees for various organizations.” Credit card purchases for meals and conferences also did not indicate who attended, the topics discussed or “whether a valid local government purpose” was served.

The state Education Department’s audit, which covered July 1, 2001, through Sept. 30, 2003, recommended the district develop procedures to ensure proper documentation for all purchases and ensure expenditures are approved by a purchasing agent.

But by the time DiNapoli’s office audited the district, covering a period from July 1, 2005, through Dec. 5, 2007, such recommendations apparently hadn’t been implemented.

Thousands of dollars in undocumented purchases were made using credit cards, including many by Superintendent Carmen Granto, and hundreds of purchases were made without the oversight of a purchasing agent.

“We found 106 purchases totaling $61,601 which were not supported with sufficient original documentation,” the comptroller’s office said in their report released last month. “In addition, for 108 charges totaling $59,327, we found no evidence indicating that the goods or services were actually received.”

DiNapoli’s office called for Operations and Maintenance Supervisor Lawrence “Butch” Beyer to face “disciplinary action” for circumventing the district purchasing agent by using his district credit card to buy thousands of dollars worth of equipment and making more than $100,000 worth of purchase orders without seeking competitive bids.

The comptroller’s office also called for Granto to face “appropriate action regarding the superintendent’s use of the district credit card for personal business.”

Granto charged at least $2,200 in travel expenses related to his personal consulting work, dozens of other charges for meals and car rentals without proper documentation to verify the expenditures were district-related. Granto told the Gazette he has since reimbursed those charges to the district.

While the comptroller’s audit was part of a statewide effort to review all 834 school districts by 2010, spokespeople for the state Education Department said their audit “speaks for itself,” and was likely initiated because Niagara Falls had an operating deficit for three consecutive years while spending 12 percent more per student than the state average.

When contacted about the 2004 audit, many board members said they didn’t remember it specifically and would have to see it to comment further.

Kevin Dobbs, who served as board president in 2004 and was sent a copy of the audit, according to documents, said he didn’t recall specifics from the audit, but was surprised to hear it cited similar problems as those in the comptroller’s audit. Dobbs said the board had likely relied on the district’s own auditors to indicate if there were any serious problems contained in the report.

Board member Christopher Brown said he did remember being audited and said he believed the board directed district administrators to address the problems. The district’s response dated April 23, 2004, and signed by then-Business Administrator James Ingrasci simply stated the district received the audit, did not disagree with it and would submit a corrective action plan.

Granto said all 40 recommendations in the department’s audit were addressed and provided a copy of the district’s corrective action plan from 2004.

An entry dated for July 1, 2004, states the district began reviewing and scrutinizing claims for travel, meals and other credit card charges “more closely.”

“Itemized claims with all necessary details are being required and employees are held to maximum per diem allowances,” the plan said. “Requests for conference and travel are being approved (including spending limits) by the employee’s supervisor, the treasurer, the business administrator and an assistant superintendent.”

Granto said as changes were being implemented, the comptroller’s office began reviewing the district for its own audit, finding issues that were still being corrected from the Education Department’s investigation.

“What happened was, quite frankly, we were getting dinged for the same things twice,” Granto said. “... As we were trying to correct this, they were looking at the same things two years later. A lot of this stuff we did address and a lot of it we didn’t get to yet — and a lot of it is ongoing.”

Current board president Robert Kazeangin echoed Granto’s comments, citing a close time frame between the audits in not completing all corrective actions. But with some similar issues appearing in both audits, Kazeangin said he is confident the board will address everything fully in the coming weeks.

“We really are on the right track and we’ll make sure we’ll be reviewing everything again,” he said. “We’re serious about this.”

Contact reporter Caitlin Murray

at 282-2311, ext. 2251.