N.J. Comptroller audit report faults North Bergen School District

The district only fully enforced two of 15 recommendations

A new 24-page report by the Office of the State Comptroller (OSC) has found that the North Bergen School District has implemented only two of 15 recommendations from a 2019 audit.

OSC’s 2019 audit found weaknesses in the district’s fiscal and operating practices, particularly regarding payments of employee benefits, in addition to a failure to comply with Public School Contracts Law and poor oversight of procurements and payments for legal and public relations services.

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North Bergen submitted a corrective action plan to OSC after the 2019 audit.

But the recent review found that the district fully implemented only two of OSC’s recommendations, partially implemented six, and failed entirely to implement the remaining seven.

North Bergen officials are pushing back on the report.

‘Failure to fully implement 13 of 15 recommendations’

According to OSC, the district has not strengthened its policies for the administration and processing of employee leave benefits. As a result, many of the district’s policies and payments expected to be made pursuant to those policies are in violation of state law, OSC said.

In contradiction to state laws enacted in 2007 and 2010 to reform practices, North Bergen policy still permits employees to receive payments up to $15,000 upon separation from employment. OSC’s review also confirmed the district continues to make annual payments to employees for unused vacation time, identifying 16 employees who together received over $125,000 in such payments in fiscal year 2020 often referred to as “boat checks.”

The district’s implementation of recommendations to comply with the Public School Contracts Law are also inadequate, according to the report. Practices related to the issuance of proper public notice, a missing requirement for competitive fee quotes and an undefined procedure for evaluating quotes all remain unchanged since the 2019 audit. The report also labeled the district’s longevity pay, attendance bonuses, and extended leave payments made to employees as “wasteful and excessive,” and noted the district has “not renegotiated collective bargaining agreements.”

“School Districts receive our taxes,“ said Acting State Comptroller Kevin Walsh. “We are entitled to expect them to be careful with the funds we send them. We at minimum expect them to not waste the money and to comply with the law. We expect them to avoid favoritism and encourage competition before entering into contracts.”

“North Bergen School District is failing in some of the most basic ways to protect public funds – even after our 2019 audit highlighted these problems.”

OSC also found that the district has not fully implemented recommendations to reevaluate its use of law firms, the monitoring of all legal services or the retention of a public relations consulting firm. While the district did ensure payments for legal services do not exceed board authorization, it failed to enact policies that ensure the efficient expenditure of taxpayer money, according to OSC.

“The mere mention of the risk of awarding contracts based on favoritism should be enough to get North Bergen moving quickly in the right direction,” said Walsh. “Instead, they provided a litany of excuses for not fully implementing 13 of our 15 recommendations.”

North Bergen officials respond

In response to the report, Superintendent of Schools Dr. George Solter defended the district in a statement.

“The North Bergen Board of Education has worked with the Comptroller’s Office to address its recommendations, however the fact is that many are not legally required or would violate existing collectively bargained union contracts, opening the district up to significant lawsuits,” Solter said.

He continued: “We find it unfortunate that the state is asking the district to comply with these onerous mandates at the same time that it is severely cutting funding to our local schools. Even while enduring these funding cuts, the district has pursued major improvement projects while continuing to be at or under the 2 percent state property tax cap, and its bond rating was upgraded twice in recent years proving its strong financial position and effective management.”

Solter touted that district passed the QSAC, which is the New Jersey Department of Education’s monitoring and district self-evaluation system for public school districts.

“The district has also passed the state QSAC auditing process with ‘high performing’ status as recently as 2020 and 2017, and it is subject to an annual independent audit that has revealed no significant issues,” Solter said.

Concluding his statement, Solter said the report was “accusatory” in nature despite cooperation by district officials for the audit, which it claims was “targeted” at North Bergen.

“Given the extraordinary level of cooperation that district officials gave to the Comptroller’s Office, the fact that the majority of its recommendations have now been adopted, and the district’s proven record of effective management, we strenuously object to OSC’s accusatory and sensational tone and we cannot help but feel that North Bergen has been unfairly targeted when many other districts lack our record of financial management and are not subject to these kinds of unfair public attacks,” Solter concluded.

Written reports due every 90 days

In an official 8-page reply to the report, Assistant Superintendent of Business Steven Somnick noted that “that such recommendations are not legally obligated to be implemented.”

“The district has worked diligently to implement most of the recommendations in the Office of the State Comptroller’s initial 2019 Audit. Utilizing OSC’s recommendations, the district has realized cost savings and increased operational efficiencies,” Somnick said.

“The district has and will continue to amend its policies to accurately reflect its statutory and regulatory obligations. Having said that, the district objects, as described above, to many of the characterizations that they have ever engaged in unlawful behavior, moreover, that it has failed to implement in-part, or in full, any number of recommendations provided by the Comptroller. The district’s deviations from OSC recommendations either are a result of differing managerial prerogatives or are non-material in nature.”

Somnick said the district will “continue to consider all recommendations provided by the Comptroller in its continual efforts to reduce costs and operate in a more efficient manner.”

“The district feels that it has continued, after COVID-19 State of Emergency, to implement most material and obligatory requirements proffered by the Office of the State Comptroller and has met the will continue to meet its obligations under the law,” Somnick added.

According to the new report, OSC said the district must now further provide information regarding their compliance in 90 days. The district will continue to do so every 90 days following that.

In addition to this report, the OSC also recently reviewed a number of municipalities across New Jersey regarding paid sick leave. Of the three Hudson County municipalities surveyed, Hoboken, West New York, and Union City, all were found to have made unlawful sick leave payments, according to OSC.

For updates on this and other stories, check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at disrael@hudsonreporter.com.

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