Hopatcong Borough School District has secured substantial aid for special education and improved its operations and internal controls over the past three years, according to a follow-up review by the Office of the State Comptroller (OSC).
The OSC's original 2021 audit of Hopatcong identified numerous improper processes, including inadequate cash management, weak internal controls, ethics violations, and errors on applications that resulted in lost state aid for special education. The follow-up report indicates that Hopatcong significantly enhanced its operations and secured more aid for special education after adopting 10 of OSC’s 11 recommendations.
The amount of special education aid received by the district increased to $585,926 in fiscal year 2021 from $236,000 in fiscal year 2020. In fiscal year 2022, the district received $696,301 in special education aid; in fiscal year 2023, it received $366,520.
“Hopatcong took seriously the audit findings and made progress in tightening controls and improving operations over the last three years. That benefitted students and taxpayers by ensuring public funds are spent wisely,” said Acting State Comptroller Kevin Walsh.
The follow-up report noted that the district revised its purchasing policies and procedures to comply with requirements to notify OSC of contracts exceeding $2.5 million. The 2021 audit had found two contracts that were not sent to OSC for review: one valued at $6.7 million for health insurance and another for $2.1 million related to selling an easement for a cellphone tower.
While Hopatcong added supervision layers to its payroll and human resources processing, it did not implement the recommendation to separate duties so that individuals entering payroll data cannot also cut checks. Separating these functions reduces fraud risk and is required by state regulation.
Other adopted recommendations include:
- Avoiding conflicts of interest by no longer awarding contracts to employee-owned companies.
- Regularly reviewing financial records to eliminate cash discrepancies.
- Resolving outstanding payroll liabilities to free up resources for other district expenses.
- Performing detailed breakdowns of rental space and employee costs for a transportation co-op shared with nearby school districts.
- Terminating employee use of charge cards for fuel.
- Adding oversight to manual payroll checks by tightening controls over check-signing privileges.
