Hampton Bays Fire District officials improperly set aside money, failed to abide by competitive bidding guidelines when purchasing new equipment and supplies, and utilized outdated information technology polices, according to a new audit released last week by State Comptroller Thomas J. DiNapoli’s office.
The audit, which was released on February 16 and examines the fire district’s finances between January 2009 and February 2010, concludes that the district’s Board of Fire Commissioners also failed to take actions that could have reduced property taxes during the 2009 fiscal year.
Messages left for four of the five Hampton Bays fire commissioners—Chairman Kevin Kenny, and commissioners Kevin Connelly, Gerard M. Buckley and Richard A. Durand—were not returned this week. Rob King, the fifth commissioner, said on Tuesday that all questions regarding the audit are being referred to Stanley Orzechowski, an attorney with an office in Nesconset.
On Tuesday, Mr. Orzechowski said the fire district had already responded to the complaints leveled in the audit as part of a four-page letter dated January 21, 2011, that had already been submitted to the comptroller’s office. He also pointed out that the commissioners have since adopted a corrective action plan, which is standard procedure.
As part of the district’s response, Mr. Durand wrote: “A number of recommended actions have already been taken by the district. The report contains no findings or suggestions of fiscal irresponsibility, financial loss or misappropriation by the district, its board or its officers.”
He also points out, in the fire district’s written response, that, overall, the commissioners adhere to competitive bidding guidelines, adding that auditors found a limited number of instances where the board deviated from them. In terms of overtaxing Hampton Bays property owners in 2009, Mr. Durand wrote: “We found no indication that the action negatively impacted capital reserves or limited the district’s ability to pay off the existing debt or reduce property taxes.”
The commissioners are elected by the public and responsible for managing the finances of the fire district, which purchases equipment and supplies for the Hampton Bays Fire Department. The fire district encompasses an estimated 13 miles and its budget totaled about $3.3 million this year.
This year, Hampton Bays property owners saw their fire district tax rate increase by about three cents, or 4.1 percent, from about 78.5 cents to almost 82 cents per $1,000 of assessed valuation. A homeowner whose property is assessed at $350,000 is paying $286.16 for fire protection services this year, or $11.30 more than in 2010.
The audit does not state how much the tax rate could have been reduced by the fire commissioners in 2009.
The audit also states that Hampton Bays Fire District Treasurer Christine Kenny improperly reserved money for purchases that were not made during the time frame they were allocated for in the budget. The report states that, in all, the fire district improperly reserved $310,940 in funds for purchases that were not made.
The report cites, for example, that the fire district apportioned $56,000 for new gym equipment in 2009. It also notes that, during that year, “the district did not issue a purchase order, enter into a contract with a vendor or appropriate funds from a 2009 budget line for the procurement of the equipment.”
The report further notes that the district did eventually purchase the gym equipment, but not until January and February 2010—so it should not have been counted against the 2009 budget. The report alleges that Ms. Kenny “was unaware that year-end encumbrances were only for obligations set aside for the payment of goods, materials and services that had been ordered but not received.”
As a result of this, the district understated its fund balance by “at least $310,000, which it could have used to increase its capital reserves, pay off debt, finance one-time expenses or reduce district property taxes,” according to the report.
Ms. Kenny, who is married to Board of Fire Commissioner Chairman Kevin Kenny, also did not respond to message left for her at the fire commissioner’s office.
The report also concluded that Ms. Kenny often paid claims before they had been voted on and approved by the fire commissioners. The audit states that after reviewing 30 claims between January 2009 and February 2010, totaling $149,457, Ms. Kenny had paid 17 claims totaling $74,298 before the board had sign off on the expenditures.
Additionally, state auditors concluded that the fire district did not adopt a competitive purchasing policy and thus violated General Municipal Law, which requires that public entities obtain competitive bids for purchases in excess of bidding thresholds, generally between $20,000 and $35,000. This law was put in place to protect against favoritism, extravagance, fraud and corruption in the purchasing of goods, according to the report.
The comptroller office’s report states that, in some instances, the fire district did not obtain bids from companies before awarding contracts for supplies. If they had followed proper procedure, the commissioners would have fielded bids and awarded contracts to the lowest responsible bidders. Instead, the audit notes that the fire district spent $55,168 on oil, gasoline, uniforms and trees from four different vendors “without soliciting competitive bids or any form of competition.”
The auditors also noted that the fire district had not developed information technology policies that explain the use of its computer systems to its employees. The report notes that computer user accounts were still enabled for two individuals who no longer worked for the fire district, posing a possible security threat.
“As a result, the district’s IT resources, systems, and its electronic data are subject to increased risk of unauthorized access, manipulation, theft and loss or destruction of sensitive data,” the report states.