The Community School Audit

Maybe I'm getting paranoid ... but, once upon a time any discussion of irregularities or inefficiencies in Community School operations by School Committee members would draw cries of "interference, lack of understanding, mean-spiritness, blah, blah, blah ..." in the local press and from "concerned citizens" (who were also frequently Community School employees!)

But, this week, a draft of the Community School audit confirming these same problems was finally produced and discussed by the Committee and what did we hear ?   (insert cricket noise here!)

Nothing.

The draft audit report is a public document--   Here are some of the highlights:

1)    The Community School operated at a substantial ($180,000) loss for the year ended June 30, 2009 (That was the year BEFORE the School Committee took direct control of the program and eliminated the Executive Council).

2)    The cash balance shown on the Community School books doesn't match the amount of cash the Town thinks they have.  Nobody knows why -- the balances have never been reconciled.  It's tricky paying bills if you don't know what's in your checkbook!

3)    After properly allocating overhead costs, several programs (including the pool) run at a loss and depend on revenue from other programs to subsidize them.  The auditors recommended (as did former School Committee members) that each programs generate sufficient revenue to cover its own costs.

4)    Operating budgets did not include all operating costs.  Specifically, the pool budget excluded utilities which were charged to the high school budget.  When the last school committee charged the Community School $60,000 to recover these costs for FY '09, it increased the loss from $120K to $180K.  The Community School had not paid this expense in years -- it should have been paid and budgeted each year.  (The $60K was based on an estimated calculation at that time -- lower estimates have since been received.)

5)    The Executive Council had been authorizing warrants for payment without the approval of the School Committee -- in violation of Massachusetts Law and against the recommendation of the Town's own auditors who had previously noted the non-compliance.

6)    The Executive Council had been signing multi-year leases obligating the District (and Town) to payments in future years without the approval of the School Committee.

7)    The Community School has been using the Cash method of accounting -- which means that income was never matched with expenses.  This made the internal management reports essentially useless.  As an example -- the internal reports for the year ended June 30, 2009 also included income for the subsequent months of July and August of 2009 --- but none of the related costs.  It did have expenses from the prior year --- BUT since the programs are different each year, the results are not comparable and useless for management decision-making (ie. comparing apples and giraffes!)

8)    The Executive Council did not comply with State procurement regulations when they hired a subcontractor to provide EMT training courses at a cost in excess of $25,000.  In fact, they did not even have a written contract with the provider.

9)    There were other internal control issues with payroll processing and financial operations at the School For Early Learning -- but you can read those in the report. 

None of these issues are new.

These issues have been discussed since FY 2008 and are the reason that the prior School Committee voted to begin restructuring the Community School by eliminating the Executive Council and taking a more direct role in the management of the Community School -- as required by law.

When the restructuring began, the popular battle cry was to blame the Superintendent for getting involved and "forcing" the Community School into a deficit -- despite the reality that the District was actually collecting LESS expense reimbursement from the Community School than they had in previous years and despite the fact that revenue was down because LESS people were actually signing up for courses.

Ironically, after hearing the audit results this week, several people are now blaming the Superintendent for not getting involved sooner!  Some of these same folks also believe the Superintendent was somehow involved in the Kennedy assassination and staging the Apollo moon landing.

Now What ?

The auditor presented a draft report to the Committee this week and answered whatever questions the Committee could produce  ("By Cash -- do you mean dollars?").  Nobody should have been surprised or confused by any part of this report --  all of these issues have been discussed previously. 

Presumably, at the next meeting, the Committee will formulate a response to audit report outlining what steps have been taken to address the issues raised in the report.  (The response should be easy since most of the corrective actions began last year with the restructuring.)

A Final Thought

I do not want to denigrate the work of the former volunteers on the Executive Council who built a tremendously popular program that provided a great public service to the citizens of  Sandwich and other surrounding towns.  They deserve thanks and recognition for their efforts and good intentions.

I do, however, fault School Committees of the past for not recognizing and/or acknowledging their responsibility to properly oversee the operation of the Community School.  This inattention allowed former Community School Administrations to operate as if they were an independent entity -- instead of in the best interests of the Sandwich Public Schools and the taxpayers of Sandwich.