TRENTON – Hopatcong Borough School District could have received additional funds in aid for special education students during fiscal year 2020, the Office of the State Comptroller (OSC) found in an audit that was released today.

OSC identified that the District omitted employee benefit costs when calculating in-district student costs on its FY 2020 application for special education extraordinary aid, also known as Extraordinary Aid. The District also did not include two students who met the eligibility requirements, which lowered the aid it received.

The District implemented new procedures for the FY 2021 application after being advised by OSC and was able to receive over $300,000 more in Extraordinary Aid than it did the previous year.

“We aim with our audits to evaluate whether local governments are acting efficiently and making good use of the resources available to them.  We are pleased that OSC’s engagement with Hopatcong School District has already improved its operations and the services it delivers to its students,” said Acting State Comptroller Kevin D. Walsh. “Our review of the school districts operations in many areas led to the limited findings identified in our report.”

OSC’s audit found that Hopatcong was failing to reconcile its financial reports, which could result in fraud going undetected or district administrators making decisions based on inaccurate financial information.

Payroll processing and human resources responsibilities were not handled separately by the District, OSC’s audit found. One employee was able to process and distribute a check without secondary approval, and could edit salary information, including their own salary. OSC verified that all the sampled salaries were correct, but noted that a lack of internal controls over how it issues manual payroll checks could result in undetected errors or even fraud.

OSC also reviewed Hopatcong’s list of vendors and found that two of them were owned by Hopatcong School District employees – a violation of the District’s own conflict of interest policy and code of ethics. One employee owned a company that was paid $9,800 for tennis court repairs and another was paid over three consecutive years for billing software and web maintenance and hosting.

Finally, OSC noted areas for improvement in allocating the shared costs between the Hopatcong School District and a transportation cooperative governed by the Hopatcong Board of Education and flagged two contracts the District should have submitted to OSC for review.

In its response, Hopatcong noted that their corrective actions are already underway, including hiring a new Treasurer of school funds and better segregating duties with regard to payroll.