Audit: BC made improper gifts to employees

He also objected to the audit targeting such a small part of the nearly $90 million budget, and one that he said holds a value beyond dollars and cents.

"I take great umbrage in the way this was done," Tebbano said.

He said no dinner was held this year, and retirees will be instead acknowledged at the Board of Education meeting tomorrow night and presented with certificates and BC Eagle pins. Such tokens of nominal value are allowed under state law.

District savings structure said to be unlawful

Though it focused on a 13-month period, the audit also identified a fund balance established by the district in 2003 as improperly formed. It was in this year the district formed a Tax Reduction Reserve to the tune of $2.7 million, intended to be used to offset an expected reduction in tax receipts due to a major shift in the assessment of PSEG's property.

The issue is state law dictates such a fund can only be formed through the sale of facilities, and this one was funded by payment in lieu of taxes receipts. District Chief Business and Financial Officer Judith Kehoe acknowledged that's the case but said the fund saved taxpayers from a crippling tax hike as the district lost over $3 million in tax revenue.

"Apparently, that wasn't known when the reserve was set up," said Kehoe.

Tebbano noted that the existence of the fund balance has been well publicized since its formation.

"The community benefited from this," he said. "At the time we assumed the process was legal and everything was above board."

In its response to the audit recommendations, the district requested the state relax restrictions on how such funds can be established.

Besides the formation of the fund, the issue is that the money should have been applied to the unrestricted reserve fund. State law stipulates that can only be 4 percent of the total budget, and money in the Tax Reduction Reserve would push it well above that mark.

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