TRENTON – Hopatcong Borough School District secured hundreds of thousands of dollars in aid for special education and improved operations and internal controls in the last three years, according to a follow-up review by the Office of the State Comptroller (OSC).

OSC’s original 2021 audit of Hopatcong identified a slew of improper processes, including sloppy cash management, weak internal controls, ethics violations, and mistakes on applications that resulted in losing out on state aid for special education. OSC’s follow-up report finds that Hopatcong substantially improved operations and secured more aid for special education after it adopted 10 of OSC’s 11 recommendations.

The amount of special education aid the District received jumped to $585,926 in fiscal year 2021, from $236,000 in fiscal year 2020. (OSC’s 2021 audit covered fiscal years 2018 through 2020.) In fiscal year 2022, the District received $696,301 in special education aid; in fiscal year 2023, it received $366,520.)

“Hopatcong took seriously the audit findings and made progress in tightening controls and improving operations over the last three years. That benefitted students and taxpayers by ensuring public funds are spent wisely,” said Acting State Comptroller Kevin Walsh.

OSC’s follow-up report said that the District revised its purchasing policies and procedures to comply with the requirement to notify OSC of contracts exceeding $2.5 million. OSC’s 2021 audit found two contracts that were never sent to OSC for review: one valued at $6.7 million for health insurance, and another for $2.1 million to sell an easement for a cellphone tower. (On July 1, 2020, the threshold for OSC notification of contracts increased to $2.5 million from $2 million. OSC’s 2021 audit covered the period between July 1, 2017 through June 30, 2020.)

While Hopatcong did add a layer of supervision to its payroll and human resources processing, it did not implement the recommendation to separate duties so that, for instance, the person who enters payroll data cannot also cut the checks. Separating these functions reduces the risk of fraud and is required by state regulation.

Other adopted recommendations include:
• Avoiding conflicts of interest by no longer awarding contracts to employee-owned companies.
• Regularly reviewing financial records in order to eliminate cash discrepancies.
• Resolving outstanding payroll liabilities to free up resources for other District expenses.
• Performing a detailed and accurate breakdown of rental space and employee costs for a transportation co-op that it shares with other nearby school districts to ensure transparency and accountability.
• Terminating employee use of charge cards for fuel.
• Adding a layer of oversight to manual payroll checks by tightening controls over check-signing privileges.

Read the report.

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To report government fraud, waste, mismanagement or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.