The governing body of interscholastic sports for schools in the Capital Region will reorganize into a new nonprofit corporation following the discovery of financial irregularities in its accounts.
The new corporation will be called Section II of the New York State Public High School Athletic Association and replace the Athletic Council of Section II. A reorganization meeting will be held Wednesday.
Paul Jenkins, Section II president, said the reorganization is based on recommendations from the organization’s attorney and accountants. Their recommendations follow the discovery that the athletic council had failed to file tax returns going back to 1978 and that few paper and no electronic records exist of the organization’s accounts. The organization also discovered it has $350,000 in bank accounts.
Jenkins said the organization is seeking to recreate its accounts and trying to determine whether fraud was committed. He added no evidence of fraud has been found to date.
The organization began investigating its finances about a year ago and had been trying to obtain records about its procedures from the section’s sole treasurer, Roger Seward. When Seward died last spring, the organization hired an accounting firm to recreate the accounting records, and the irregularities were discovered.
Jenkins said the new organization will pay any back taxes owed and move forward to ensure the proper handling of funds in the future. He said any funds remaining in the account of the old corporation will be transferred to the new corporation following discussions with state regulators and the federal Internal Revenue Service.
Two local superintendents whose schools are members of the conference said the irregularities in Section II’s accounting practices are troubling but the planned changes will make the system stronger.
Kathy Dougherty of the Northville Central School District said she was troubled by the letter’s contents, especially by the admission of the lack of regular audits or accounting of funds annually within the organization.
“We are audited three times every year, and we get a periodic state comptroller’s audit. It is the duty of school districts to be transparent. To have something like this is troubling,” she said.
She said Section II’s executive committee should be held responsible for the lack of oversight.
“It would come down to the members of the executive board to be responsible. Clearly, there are discrepancies and the absence of transparency in oversight of organization,” she said.
Dougherty said she also has to question whether Section II was charging appropriate dues to member schools, in light of the revelation that the group’s accounts contained $350,000.
“If they have that much in the treasury, are our dues an accurate amount of what is needed?” she asked.
Michael Vanyo, superintendent of the Gloversville Enlarged School District, said the letter raised concerns about Section II’s operations for him, as well. He said he followed up on his concerns and came away satisfied the group would make changes to prevent these problems from occurring again.
“They made a plan to move forward and are looking to make the corrections they need to do. They have identified some problems, and I am supportive of that,” he said. “I think they will move forward and will put some things in place to make it a better system for everyone.”