Provides school districts with flexibility in carrying out their claims auditing function

Section 2 of the bill would similarly amend subdivision 20-a of § 1709 of the Education Law to provide that a union free school district may adopt, in its discretion, a resolution establishing the office of deputy claims auditor to act as claims auditor in the absence of the claims auditor. Education Law § 1709, as amended, would provide that when the board delegates the claims audit function using an inter-municipal cooperative agreement, shared services, as authorized by § 1950 of the Education Law, or an independent contractor, the board would be responsible for auditing all claims for services from the entity providing such delegated claims auditor, either directly or through a delegation to a different independent entity.

Section 3 of the bill would amend paragraph e of subdivision 2 of § 1711 of the Education Law to include deputy claims auditors in the list of persons over which the superintendent of schools of a union free school district has supervision and direction.

Section 4 of the bill would amend subdivision 5 of §2503 of the Education Law to include deputy claims auditors in the list of positions over which the board of education of a small city school district has authority to create, abolish, and to fill by appointment.

Section 5 of the bill would amend subdivision 5 of section §2508 of the Education Law to include deputy claims auditors in the list of persons over which the superintendent of schools of a small city school district has supervision and direction.

Section 6 of the bill would amend subdivision 2 of §2503 of the Education Law to provide that if a small city school district has established the office of deputy claims auditor; the deputy claims auditor may in the absence of the claims auditor approve the disbursement of money by the treasurer of such city school district. Section 2503(2), as amended, would provide that where such district has appointed a claims auditor and deputy claims auditor, no money would be paid out by the treasurer of such school district except upon the warrant of the claims auditor or deputy claims auditor.

Section 7 of the bill would amend subdivision 1 of section 2524 to provide that a small city school district may present an itemized voucher for a claim to the deputy claims auditor, in addition to the claims auditor, for the deputy claims auditor's audit and allowance of such claim.

Section 8 of the bill would amend §2525 of the Education Law to provide that the deputy claims auditor, in the absence of the claims auditor, may consider a disputed claim, which may include taking testimony from the claimant relative to the justness and accuracy of such claim and taking evidence related to such claim, and may endorse such claim.

Section 9 would amend §2526 of the Education Law to provide that a small city school district may adopt, in its discretion, a resolution establishing the office of deputy claims auditor to act as claims auditor in the absence of the claims auditor. Education Law §2526, as amended, would provide that when the board of education of such school district delegates the claims audit function using an inter-municipal cooperative agreement, shared services, as authorized by § 1950 of the Education Law, or an independent contractor, the board of education would be responsible for auditing all claims for services from the entity providing such delegated claims auditor, either directly or through a delegation to a different independent entity.

Section 10 of the bill would amend §2527 of the Education Law to require a deputy claims auditor appointed to such position in a small city school district to execute an official undertaking prior to taking office, just as the claims auditor is currently required.

Section 11 of the bill would amend subdivision 2-a of §2554 of the Education Law to provide that a big city school district may adopt, in its discretion, a resolution establishing one or more offices of deputy claims auditor to act as claims auditor in the absence of the claims auditor. Education Law §2554(2-a), as amended, would provide that when the board of education of such city school district delegates the claims audit function using an inter-municipal cooperative agreement, shared services, as authorized by § 1950 of the Education Law, or an independent contractor, the board of education would be responsible for auditing all claims for services from the entity providing such delegated claims auditor, either directly or through a delegation to a different independent entity.

Section 12 of the bill would amend subdivision 2 of §2562 of the Education Law to provide that a person may present a claim for settlement on an account or claim against the board of education of a big five city school district to the deputy claims auditor in the absence of the claims auditor. Accordingly, §2562(2), as amended, would authorize the deputy claims auditor, in the absence of the claims auditor, to take testimony and evidence in considering such a claim.

Section 13 of the bill would amend subdivision 6 of §2566 of the Education Law to include deputy claims auditors in the list of persons over which the superintendent of schools of a big city school district has supervision and direction.

Section 14 of the bill would amend paragraph a of subdivision 1 of §2576 of the Education Law, which relates to the big four city school districts annual estimates including salaries of school personnel, to include deputy claims auditors' salaries in such estimates.

Section 15 of the bill would amend subdivision 2 of §2580 of the Education Law to authorize the deputy claims auditor of a big five city school district to sign an order authorizing the disbursement of money by the treasurer of such school district in the absence of the claims auditor.

Section 16 of the bill would authorize the Commissioner of Education to implement any regulations necessary to implement this bill.

Section 17 of the bill is the effective date.

Statement in support of the bill

In 2005, Chapter 263 of the Laws of 2005 amended the Education Law to establish an internal audit function within each school district. Chapter 263 provided that each school district could, in its own discretion, adopt a resolution creating the office of claims auditor and appoint a claims auditor to hold his or her position subject to the pleasure of the board of education or the trustees of such district. Such claims auditor would be required to report directly to the board of education or the trustees of such school district. Such position would be classified in the exempt class of the civil service.

Chapter 263 further provided that a school district could delegate the claims audit function by. using an inter-municipal cooperative agreement, shared services to the extent authorized by § 1950 of the Education Law, or independent contractors, to fulfill such function. Chapter 263 also amended other provisions of the Education law to strengthen and enhance the claims audit function within each school district and accordingly increase financial accountability in each district.

This bill would afford school districts with greater flexibility in carrying out their claims audit function by authorizing each district to establish, by resolution, an office of deputy claims auditor to act as the claims auditor in the absence of the claims auditor.

The bill would also address a conflict of interest problem that has arisen for school districts that elect to have boards of cooperative educational services (BOCES) or other independent entities serve as their claims auditor. A claims auditor must conduct an independent review of the claims submitted to the school district and needs to avoid situations that may involve a conflict of interest. Accordingly, where a BOCES or other independent entity is delegated authority to carry out the claims audit function, the employees of that BOCES or other independent entity should not be auditing claims under contracts between the school district and that BOCES or other independent entity. For school districts that wish to make use of BOCES to carry out their claims auditing function, as Chapter 253 of the Laws of 2005 permits, particularly districts in rural areas where there are few options for carrying out the claims auditor function through private firms, the need to avoid such a conflict of interest has created some difficult challenges. This hill would clarify that where a hoard of education delegates the claims auditing function to a BOCES or another independent entity, the board of education is responsible for auditing any claims for services from that BOCES or other entity, either directly or by delegating to a different independent entity. This affords school districts with flexibility in how to address the conflict of interest problem, while preserving the core principle of Chapter 253 of the 2005 that the independence of the claims auditor must be maintained so that school district tax dollars are effectively protected.

Collectively; the amendments made by this bill would further increase the efficiency and effectiveness of the claims audit function and in turn, enhance the protection of New York State residents' tax dollars.

Budgetary implications of the bill

The amendments made by this bill afford school districts with additional options in how they carry. out their claims auditing function and do not impose any new mandates. Accordingly, the bill would not impose any additional costs on school districts or the State.

Prior legislative history

This is a new bill.

Effective date

This act would take effect immediately.