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State audit rips Falls schools Says district overpaid Granto, 272 employees

State auditors have asked federal authorities to help them look more closely at Niagara Falls School District finances after they found that the district overpaid 272 employees by more than $500,000 and that Superintendent Carmen A. Granto improperly received vacation pay of $10,800 and used a district credit card for private consulting work.

"The school district let taxpayers down . . . ," State Comptroller Thomas P. DiNapoli said Tuesday while releasing an audit covering the period

July 2005 to December 2007. "District officials must take their financial responsibilities seriously to ensure they do not spend a dime more than is necessary."

Among the findings in the stinging 66-page report:

The district auditor did not understand his role, duties or authority.

The district granted the superintendent 45 vacation days each year, but Granto failed to record when he used vacation time for 12 years, including several instances when he took trips to Florida. Granto also requested a lump sum payment for unused vacation days each year. Because he never recorded any vacation time, the district inappropriately paid him $10,800 for 21 vacation days during the 2004-05 school year alone.

"As such," the comptroller's office said, "there is a strong possibility the district made inappropriate lump sum payments to the superintendent for a number of other years."

Granto also used his district credit card to pay for $2,200 in travel expenses that were related to his outside consulting work.

Granto has since paid back all of the money he received inappropriately. He has been with the district 42 years, the last 16 as superintendent, and has announced plans to retire at the end of the school year.

Payments made to him during his last three years on the job have boosted his salary, normally about $130,000, to just over $200,000 and will be used to calculate his state pension.

His contract also allows him to receive lump sum payments for unused sick days. Granto received two checks totaling $147,532 since 2006 for unused sick leave. Another payment is due this year.

Granto said that he shouldered the blame for mismanagement and that he and the School Board already have started taking steps to clean up the mess.

"It happened on my watch," he said, "and it's going to be cleaned up on my watch. I should have been aware, but I wasn't. It's not an excuse, it's just what happened."

The financial troubles in the district raised enough concerns that state auditors want to bring in more help.

"[Our] investigation unit will be working with federal authorities to delve a little deeper into the audit findings," DiNapoli spokeswoman Emily DeSantis told The Buffalo News.

The U.S. attorney's office in Buffalo is aware of the comptroller's audit.

"We haven't seen the audit report yet, but anything submitted to us will be closely reviewed by this office in conjunction with the appropriate law enforcement authorities," U.S. Attorney Terrance P. Flynn said.

District officials chalked up the problems to sloppy bookkeeping and procedures, not workers gaming the system.

School Board President Robert Kazeangin Jr. said the board has been aware of many of the audit's contents since January and has been taking steps along with Granto to correct problems by implementing 33 recommendations outlined by the comptroller's office.

He said the school district also hopes to find a new business manager next week, when applications for the post are due. The new business manager will replace James J. Ingrasci, who retired in August after 20 years with the district.

Asked if Ingrasci retired because of the audit situation, Kazeangin replied, "All I can say is he just retired."

Kazeangin said the claims concerning Granto were among those that resulted from poor record-keeping. For example, he said, Granto was overpaid $10,800 for vacations because district officials told him he had the time coming.

On Aug. 4, when those officials learned he didn't, Granto reimbursed the district in five minutes, Kazeangin said.

Kazeangin said the district also has recovered almost all of more than $500,000 in overpayments made to 272 of its employees when district officials cut them each an extra week's paycheck last year by accident.

"All but nine of them have returned the money. Their names have been turned over to our legal counsel. We are going to recoup the money," he said.

Granto said he also repaid the $2,200 in charges made on his district credit card when he went on a private consulting trip to Florida. He said the people who hired him to come down and speak were supposed to reimburse the district, but never did.

Because of the vacation overpayment for Granto during the 2004-05 school year, the audit suggested it's possible the district made inappropriate payments to him for other years.

Granto, however, said he did not take a day of vacation time from 1992 through 2000.

"I was busy with other things, like building a high school," he said.

Auditors also discovered the district paid $543,000 to 12 individuals as independent contractors when they should have been compensated as employees.

The comptroller's office said auditors also found the district:

* Improperly paid $24,615 to a former administrator for leave time and paid a dozen employees a total of $17,500 for overtime and other benefits they were not entitled to.

* Used the same external auditor for 35 years. That auditor, Simpson-Kling of Tonawanda, failed to identify deficiencies in vital internal controls. Board member Christopher H. Brown, chairman of the board's audit committee, said the district has hired a new auditor.

* Made 28 purchases totaling $186,000 without the benefit of competition.

* Regularly circumvented the purchase order process, which placed the district at risk for making unauthorized purchases and reduced budgetary control.

* Had systemic deficiencies in $514,160 worth of claims.

* Incurred $5,038 in credit card late fees because district employees did not promptly provide sufficient documentation and allowed individuals other than the designated card holder to make purchases with district credit cards.

Among other things, the audit recommends district officials establish strong financial controls; recover improper salary and benefit payments; and adopt comprehensive financial policies.

News Staff Reporter Dan Herbeck contributed to this report.


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