A Lesson In Money “Laundering”: Two School Districts Apparently Don’t Pay By The Book

Two Long Island school districts, Brentwood and the Town of Oyster Bay specifically, seem to have been misappropriating funds. In fact the state comptroller’s office found they were paying insurance premiums for deceased employees and/or their deceased spouses.

According to officials, the amounts pail out over the course of 18 months amounted to nearly $12,000 for one retiree’s spouse in Brentwood and about $2,000 for a retiree in Oyster Bay. And, that has initiated a movement toward greater safeguards.

In a recent audit spanning from January 2005 to June 2006 and which looked at 20 local governments including the towns of Islip, Brookhaven, and the Three Village School District, authorities confirmed that nine governments had paid out $786, 481 for health insurance for 65 retirees or their dependent spouses who had since passed on as far back as more than a decade ago.

Of the 20 districts investigated, surveys suggest that only one, Islip, had a clean and accurate system for keeping track of retirees including a yearly questionnaire and follow-up. The remaining 19 were informed of their retiree’s stats via the state retirement system or by reading obituaries.

In Brentwood, auditors determined that $11,851 in insurance premiums was paid out for one dependent spouse of a retiree whose spouse died back in January of 2005. And, now the district is going after reimbursement for the insurance provider.

The assistant superintendent for business and operations for Brentwood schools recently contacted the state comptroller’s office via letter noting that the district strengthened its controls back in July of 2006 and now requests notarized letters back from Medicare-eligible retirees.

Oyster Bay is noted as paying out $2,033 in premiums for a retiree who had been deceased since December 2005. However the town was reimbursed by the insurance provider. And, town officials note that while notarized letters are required for those (retirees) 65 and older there is no communication for those under that age and that there is always room for improvement