Photo Courtesy of Assemblywoman Yuh-Line Niou’s Office
“The SCA’s bungling of financial records potentially cost the City millions,” Comptroller Stringer said.
By Forum Staff
The City-funded School Construction Authority has kept more than $100 million in an obscure – and inadequately managed – “miscellaneous” checking account, which could lead to waste or abuse, according to an audit released on Thursday by Comptroller Scott Stringer.
The study examined a two-year period and discovered insufficient controls over the account, Stringer noted, as well as a failure to follow a State law requiring investment of public dollars entrusted to the SCA in order to ensure maximum returns.
The SCA is funded largely through the City’s capital budget, but it also receives money from other sources, ranging from lease payments to insurance and litigation settlements, the comptroller said. For those external dollars, the SCA created a special account called the “Other Funds Account” (formerly known as the “Miscellaneous Checking Account”). Stringer’s office discovered that the account’s balance grew dramatically—from $20 million to $104 million—between Fiscal Years 2007 and 2016.
When auditing the account for Fiscal Years 2015 and 2016, Stringer found that SCA’s internal controls to ensure proper accountability and transparency were lacking. In addition, the probe found that rather than investing the funds as authorized by State law, the authority kept them in a checking account that earned minimal interest from May 2015 through June 2016 – a missed opportunity to earn better returns. That failure to follow State law and invest those dollars as prescribed by law, Stringer pointed out, means that hundreds of thousands of dollars that could be going to improving school facilities have been left on the table.
“The SCA’s bungling of financial records potentially cost the City millions. When we could’ve earned a significant return by investing tens of millions of dollars, the SCA knowingly left money on the table,” the comptroller added. “That incompetence comes at the expense of our children. Hundreds of thousands of critical, additional dollars that could have been put toward supporting our schools, our kids, and facilities were ultimately lost. That’s unacceptable. The SCA must immediately implement controls that will allow for stronger oversight of public funds in the future.”
Stringer issued a series of recommendations as part of the audit, including: Deposit the funds maintained in the account not needed for immediate use in an investment account; implement proper controls over the account.
In its response, the SCA agreed with the audit’s recommendations and stated that it had begun to implement most of the recommendations prior to the commencement of the audit based on reports it received from the SCA Office of Inspector General and Ernst & Young consultant company.