Auditors for the state Comptroller’s Office conducted an internal audit of financial matters in the Kiryas Joel Union Free School District and found the district’s board president and vice president also are officers of the board of directors of a not-for-profit corporation that entered into a lease agreement with the district for a school building.

The auditors said that while district taxpayers approved the lease alternative and the payments are based on an independent appraisal of the fair rental value, if the district continues to make payments over the 30-year lease period, district taxpayers will be burdened with rent payments totaling approximately $38 million, assuming a three percent annual inflation rate, and would not own the building at the end of the lease period.

If the district had obtained voter approval and financed the construction with serial bonds at an annual interest of six percent, the total cost of the building to district taxpayers would have been approximately $35 million – resulting in a savings of about $3 million over 30 years – and the district would own the building, the state officials said.

The board’s procurement policy needs to be improved because it did not provide proper and detailed guidance for district employees when procuring goods and services, according to the audit. The district’s claims auditor did not report to the board as required by law and did not meet independence requirements established by Education Law, and district officials failed to prepare and file the district’s annual financial report and annual audit report for the 2005-06, 2006-07 and 2007-08 fiscal years with SED and the Office of the State Comptroller on a timely basis, the auditors said.

(Source: MidHudsonNews)