For this article, I’m going to move away from story telling and get right to the point. Here are my preliminary findings from reviewing the budget history and the audited financial statements of the school district.
It appears the Board of Education is making staffing and programming decisions without critical financial information that they need. One would think that if there was any single item in the budget that should be accurate, it would be the Superintendent’s salary. But even that appears to be off, as you will see below. I believe that many of the staffing cuts planned for the upcoming school year are not necessary, and I encourage the Board to bring in an outside party to perform a forensic accounting analysis of the school’s financial position and produce a plain language report that is easily understandable for the layperson.
My earlier findings that the Administration’s budget projections were too high appear to be correct. From 2006 through 2010 it appears that the school system generated a “profit” of almost $16 million by spending less than it was allocated.
I believe much of the error is coming through the benefits line. In the school year that ended in June 2010 alone, the budgets show that the school spent almost $8 million less on benefits than was originally planned.
In the school year ended 2010, the Administration issued $5 million in bonds to pay tax certiorari refunds. However, the audits suggest that the budget had more than enough “profit” to pay for these refunds even though they were not included in the original budget. It appears the $5 million raised from the debt issuance was moved to a reserve account for future use.
The audits show that in the year ending June 2010, there was $21 million sitting in a reserve account called the General Fund. I believe that $19.5 mil of this is available to fund current and future school services. The audit shows that the Administration has set aside more than $6 mil of this for future tax certiorari refunds. However, the financial reports suggest that the ongoing operations have had more than enough money to pay for these tax refunds which implies that the reserve is not necessary.
As another example of inaccurate budgeting, the budget has not properly accounted for the Superintendent’s salary. For the school years ending 2007 through 2010, the budget actuals suggest he was paid $56,000 more than what was shown in the original budgets. The Board members insist he is earning according to his contract, and I’m sure that he is, but this speaks to a very flawed financial planning tool.
It appears the historical budgeted salaries for the Assistant Superintendents of Personnel, Elementary Education, and Secondary Education did not account for raises in each upcoming year. The actuals suggest that together they were paid $56,000 more than what was shown in the original budget documents from 2007 through 2010.
Finally, the Administration announced in March that the Superintendents would be taking a pay freeze in the upcoming year. The final budget approved by the Board left the originally planned salary increases intact.
So what’s the point? Some of these numbers are large and others are small, but all speak to a budget document that serves no purpose. I do not mean to suggest that there is any bad intent here, just benign neglect. Nonetheless, this is a big budget and we need Board members with the skills and willingness to challenge the Administration to do a better job.
This is a project I have been working on since early March, and I plan for it to be ongoing. I have, at various times, brought my findings to different people in the community, including people in city government and members of the Board of Education. But my concerns fell on deaf ears. It is only when I brought this to the attention of Robert Cox that there was any interest in my findings. Robert, and other members of his campaign staff, provided guidance and direction to me as I worked through the figures. Because of this, I agreed to be the Treasurer of his campaign and I will vote for him on May 17th.
As I have gotten to know Robert over the past several weeks I have only grown more impressed with his character and his knowledge of the school system. I can say with confidence that, when elected, he will hit the ground running with numerous proposals to improve pedagogical services and put the finances of the system on much firmer footing.
Adam D. Egelberg, CFA