BROADALBIN — An audit done on the Broadalbin-Perth Central School District showed district officials did not develop and manage a comprehensive investment program, and as a result, officials did not maximize interest earnings for the district.
An audit by the New York state Comptroller’s Office was done between July 1, 2018 through Jan. 31, to determine whether district officials maximized interest earnings in which officials did not formally solicit interest rate quotes or prepare cash flow forecasts to estimate the amount of funds available for investment, and officials earned interest totaling $40,652 during the audit period, however they could have earned about $159,100 more had officials used other available investment options.
According to the audit, district officials should develop and manage a comprehensive investment program that includes the board annually reviewing and investment policy in accordance with the state General Municipal Law. The board did adopt an investment policy in 2017, but did not implement a comprehensive investment program.
“For example, during the audit period, District officials did not formally solicit interest rate quotes from additional financial institutions or prepare any cash flow forecasts to estimate the amount of funds available for investment,” the audit states.
During the audit period, operating funds were deposited in one interest-bearing checking account with interest rates ranging from 0.1 to 0.5 percent and two non-interest bearing checking accounts resulting in interest earnings of $40,652 related to its operating funds.
“We identified the funds that were not needed to pay operating expenditures each month and found that the district could have invested available operating funds averaging approximately $6.4 million in another financial institution at higher available interest rates of between 1.49 percent and 2.37 percent, or an average interest rate of 2.02 percent during the audit period,” according to the audit.
According to the audit, the comptroller’s office recommends the school district periodically solicit interest rate quotes from financial institutions; ensure available funds are invested within legal limits, to maximize interest earnings; and prepare cash flow forecasts that estimate funds available each month for investment.
In a response from Marco Zumbolo, assistant superintendent for business and operations, “I would like to take this opportunity to thank the field auditor on site for her time and effort, and for handling the lengthy audit process with utmost integrity, professionalism, and class.”
The district also created a corrective action plan in which they will, continue to explore additional options for investments and solicit quotes from approved financial institutions, and examine opportunities from potential new investment partners in the future; passed a resolution to allow for investment of funds, and the board of education policy regulates investments according to legal requirements and limitations, and will have monthly discussions with the finance committee regarding investment options; and the finance committee will meet monthly, continue monthly cash flow discussions, and a formal document on cash flow projections and the committee’s standing progress will be made available to the board of education quarterly beginning in January.
