Schools audit questions budgeting

Schools audit questions budgeting

SMITHFIELD - Last year's kerfuffle over whether the School Committee really needed $450,000 on top of its $32 million budget to hire teachers could have been avoided with a relatively simple financial maneuver, according to B&E Consulting LLC, Providence.

The firm of certified public accountants, in its 86-page performance audit of Smithfield Public Schools, said the school board actually did have $450,000 it could have used, but the money was in its reserve account and committed to specific purposes, so school officials were hesitant to spend it.

School officials argued it would not be "appropriate" to spend committed funds, the audit said, but they should have borrowed it for a limited time if they were certain the performance audit would see the Town Council eventually release the $450,000.

"B&E believes that the (administration and School Committee) had the funds needed (and) the authority to use these funds ... and should have done so (using its reserves)."

Such a course of action "could have avoided the uncomfortable back and forth with the Town Council, which would have saved time and effort for both entities," the consultants said.

The School Committee intends to discuss the audit at its next meeting, Dec. 2 at the high school, with a starting time of 6:30 p.m., a half-hour earlier than usual, to accommodate what could be extended discussion. Chairman Richard B. Iannitelli reserved comment until that meeting, which will be a joint session with the Town Council. Walter E. Edge Jr., a principal of B&E, also declined comment; it is company policy to let the audit speak for itself, he said.

The Town Council commissioned the audit in June at a cost of $43,650 after disagreements arose over the school board's request for another $450,000 to hire teachers who educators said were needed for the upcoming school year and were ready to take positions elsewhere.

In a unique arrangement voters approved at the Financial Town Meeting in June, release of the funds was embargoed until the audit was done. Later the council assured the school board of $300,000 so some hiring could be done. (Among those then hired was Mike Starring, the high school's second technology teacher, named Technology Teacher of the Year for Rhode Island last week.)

The audit explicitly says the full $450,000 should be released to the School Committee, which "most likely" needs more than that. Because the town has provided schools with the same amount of money in each of the last three years, consultants said, the School Committee has used up its reserves and now faces annual structural deficits.

The audit warns that correcting the structural deficits "in one year's time" will likely mean increased property taxes. While taxpayers benefited while the schools used reserve funds, the auditors say "the increase in property taxes will be more significant than the initial break given."

An important question the Town Council asked B&E to answer is: How did the School Department manage to have $1 million surpluses year after year, after receiving less money from the town than school officials requested?

"They didn't," the consultants answered. The school system "did not have a million-dollar surplus in any of the last four years." The school system had operating surpluses, but some of the surplus funds were its own money it had taken from reserves, the auditors said, and other funds were committed to future expenses.

Actual surpluses for FY2010 were $402,746, FY2011 was $137,180 and FY 2012, $62,785, according to the audit.

The council's concern over the School Committee's budgeting methods was not necessarily unfounded. B&E found repeated instances of over-budgeting in the school system, concluding that "since FYE (fiscal year end) 2010, (schools have) overstated (their) needs by hundreds of thousands of dollars each year."

The audit gives school officials the benefit of the doubt, suggesting that the business manager and superintendent "would rather have a large surplus than a small deficit."

In its 10-page written response to the audit, the school system defends its budget requests as necessary and refutes any idea of "wish lists."

Surpluses may not have reached $1 million, but since 2010 they have been "far greater than is reasonable ... so much so that the reserves had reached the point of being excessive," the audit says. Funding decreases in 2013 and 2014 mean the reserves should soon be at a "more appropriate level."

The audit recommends, and school officials agree, that the state-ordered budget process should be shortened and take place later in the calendar year when specific expenses can be accurately set, and also calls for an expanded executive summary to the local budget packet.

In other highlights, the audit recommends that the School Department stop ordering supplies a year before they are needed, and urges a link between the town and school system so data stored in computers can be shared in real time, particularly financial information. It is suggested in the audit that all-day kindergarten be implemented and that the schools share with the town building and grounds work, two proposals the School Committee is actively considering.

- Valley Breeze & Observer Correspondent Gerry Goldstein contributed to this report.

Comments

It is precisely this type of external audit that should NOT be used to make decisions at the school level. Some outside company, who has no educational experience, gets decides what is appropriate for student needs. I am not an employee of Smithfield, but I find it irresponsible that people may use this report to determine the needs of the school department. Increase the number of students in math classes at the high school..... really smart when they have proven their approach works to get students to graduation proficiency required by NECAP. That $43,000 could have been spent to support students in another way.