Under a financial microscope

The release from jail of the former Roslyn schools superintendent two weeks ago served as a reminder for local district officials about the many financial oversight changes that have been enacted in recent years.

Frank Tassone was sentenced in 2006 for his part in an $11 million embezzlement scandal in one of Nassau County’s wealthiest districts. He was released from an upstate prison eight months early and will be on parole until 2018.

Following the largest public school financial scandal in New York history, the state enacted sweeping reforms for districts that would improve oversight. Local officials are mixed on whether or not these changes have proved effective, because of the extra cost to taxpayers.

“There have been a number of additional mandates that were initiated,” District 24 Superintendent Dr. Edward Fale said. “The goals were to prevent any type of fraud.”

School districts had to establish an audit committee, add an internal auditor and undergo a financial review by the state comptroller’s office. Additionally, school board members are now required to receive financial oversight training.

Fale said districts previously had an external auditor, an independent firm which monitors the books each year, and a claims auditor, which reviews each and every bill a district pays. The new regulations call for districts to have an internal auditor to review any risks within a district’s financial practices. Fale said this costs District 24 about $35,000 per year.

District 13 Assistant Superintendent for Business Meredith Brosnan said the internal auditing firm assesses the financial controls and practices to check for any risks. The internal auditor goes through one area at a time, such as payroll or purchasing procedures, and does an in-depth analysis. She said auditing costs for the district have gone from $18,900 before the Roslyn scandal to $92,000 thus year.

“The man who said he felt he was entitled has cost the taxpayers a lot of money,” Brosnan said, referring to Tassone.

The Central High School District, which has the largest budget of the four districts, pays about $128,000 for auditing services.

State Comptroller Tom DiNapoli’s office recently concluded its audits of all 733 school districts and BOCES in New York. In Valley Stream, the comptroller has cited excess funds in two of the four school districts, but has found no waste, fraud or abuse. Recommendations have included strengthening reimbursement practices, better limiting access to financial software, seeking competitive proposals for professional services and segregating duties in the business office.

District 24 Board of Education trustee Tony Iadevaio said that the district began strengthening its financial controls immediately after the Roslyn scandal. He said that in the business office, there was little segregation of duties because of a small staff. One person would be responsible for all aspects of payroll, while another person took care of the purchasing.

But immediately after Roslyn, Iadevaio said, they separated duties so one person is not responsible for every step in a financial process. It is all overseen by the assistant superintendent for business. “That way we have checks and balances all the way through,” he said.

Additionally, the board serves as the audit committee so trustees look over each and every bill the district pays. Iadevaio said a different board member serves as chair of that committee every year.

He added that he doesn’t mind the additional oversight mandates even though it does cost some extra money. The Roslyn situation opened a lot of eyes, Iadevaio noted. “It was something that you never thought about before,” he said. “You figured you’d hired the most trustworthy people and nobody would look to steal from the kids.”

Frank Nuara, a trustee in District 24, said it is a shame that the former Roslyn leaders created a situation where districts must now pay thousands of extra dollars for additional financial oversight. “It’s an unfortunate diversion of money that should be going to children,” he said.

District 13 officials say that they support greater financial controls and accountability for school districts, but question if the additional cost is practical. “There’s a point of diminishing returns,” Brosnan said.

DiNapoli is proposing a series a new regulations that would allow districts to create reserve funds for retirement costs, as well as provide more transparency on how much money school districts are carrying in various reserve funds. These changes would have to be approved by the state legislature.

Board training

One change that local school leaders across the board like is the additional training for board of education members. It is a one-time workshop for new board members as well as existing board members upon being elected to a new term.

Ken Cummings, president of the District 30 Board of Education, said the six-hour course includes three hours on financial oversight and three hours on the fiduciary responsibility of board members. The workshops teach board members how to look over financial documents and what type of questions they should be asking district administrators.

“I think it’s definitely beneficial,” Cummings said. “People have all different backgrounds. They don’t all come from education or finance.”

Nuara said that since the board of education is ultimately responsible for the well-being of the district, the financial oversight training is beneficial.

Most board members in District 24 were able to receive the training locally at a one-day seminar at the Plainview Marriott. Iadevaio said he received his training at a conference. “Now they have it where you can do it online,” he said.

District 13 trustee Bill Stris agreed that the training is beneficial, especially for new board members. He said it gives them a chance to learn the role of each type of auditor.

“Is it worth it? Absolutely,” Stris said of the training. “It gives you an overview from a financial point of view of what you’re responsible for.”

Keeping the auditors in check

Four people were sent to jail in the wake of the Roslyn scandal including independent auditor Andrew Miller. Although he was not implicated in the theft of money, he was given four months in prison for his role in the cover-up by changing the district’s financial records.

Valley Stream school districts used Miller’s firm at the time of the scandal. District 13 Superintendent Lison said the firm was immediately dismissed. Fale said District 24 also switched auditing firms shortly after.

Because the auditing firm was implicated in the Roslyn scandal, the districts each brought in other firms to analyze the prior year’s books and check for any inaccuracies. None were found. “We actually audited the same year twice,” Brosnan said.

The state also now requires that districts go out to competitive bid for its external auditors every five years, although there is no requirement to change firms. Fale said District 24 has switched its auditing firm twice since the Roslyn scandal. He said it is a good practice to make a change to prevent an over familiarity between school district officials and the auditors. “I think there’s a comfort zone that could emerge, as what happened in Roslyn,” he said.

‘A crying shame’

Iadevaio said he is appalled that Tassone was released from prison early after stealing more than $2.5 million alone from the Roslyn School District. “I think it’s a crying shame,” he said. “I don’t care that he paid it back because he took it.”

Even more outrageous, Iadevaio said, is that Tassone continues to collect his six-figure annual pension.

Although Lison only became a superintendent during the last years of Tassone’s tenure in Roslyn, she described him as very distant from the rest of the schools superintendents in Nassau County. Brosnan said the same about Pamela Gluckin, the assistant superintendent from Roslyn who remains in jail for stealing more than $4 million.

“It was an isolated case,” Lison said of the Roslyn scandal. “It’s horrible because it gives the profession a bad name.”