THE SCHOOL DEPARTMENT LEDGER: THE FACTS

In the tedious art of bookkeeping, the ledger is the roadmap to “what’s going on.” It’s the big picture of spending, which helps determine the financial health of an institution, and it’s also the crystal ball, able to predict what will happen if spending isn’t curtailed. The ledger reveals priorities; it is a tool by which any CFO or financial manager will make their important decisions.

With this week’s recent reports of school department overspending, and the Superintendent’s full-page ad in defense which appeared in the October 22 Advocate, The Mirror has obtained copies of the School Department ledger sheets for fiscal years FY 02-04, which have already been closed. Here’s what was found:

FY 04: Overspending has been determined at $527,696.56, with the largest part of that being a KeySpan bill for nearly $190,000. As Councilor Matewsky so ably pointed out last Monday, the rest of the bills that haven’t been paid ranged from $28.00 for bottled water to the School Department’s labor attorney, James Tobin, who is owed over $5,000. Special Education transportation costs are also listed, at over $142,000. The Superintendent insists that the Mayor made a promise to cover the outstanding invoices with any Medicaid reimbursement money over and above $594,000 that had been set aside for the tax levy. However, the amount that came in ($16,000) by the end of the fiscal year was substantially smaller than the school department’s overage. In reality, the School Department and the School Committee has been misrepresenting the Mayor’s “promise”, which was related to the 85/15 split on the teacher’s health insurance to cover teacher bonuses, expenses that would be incurred in FY 05 – not FY 04. The School Department also tried to enlist the City Council and the Mayor in a plan to establish a Medicaid Revolving Fund in which the city’s “free cash” would be placed in a revolving fund, and then replaced with the reimbursement check when it arrived. Despite assurances from the School Department’s consultant, former city auditor Donald Andrew, and Assistant Superintendent Richard Wallace that there was “no harm, no foul” in setting up the account, the Department of Revenue had indicated in writing their disapproval of the plan even before it was voted on and a very stern follow up letter of disapproval after the vote was taken.

The ledger, however, indicates overspending occurring in these categories:

Central Administration salaries, by $374,052.80
Central Administration Miscellaneous Expenditures, by $122,911.52
Special Education Salaries, by $516,320.90
Special Education Exp., by $41,521.31
Maintenance Salaries, by $3,433.46
Student Handbooks, by $4,958.25
Water and Sewer, by $6,041.26.

Conversely, the teacher’s salaries line item was under spent by $98,520.08. It is interesting to note that had the School Department stayed within their budget on just Central Administration Salaries and Central Administration Miscellaneous Expenditures, in which the combined overspending was $496,964.32, there would have been nearly enough money to cover the outstanding bills that are currently due. In fact, the overspending in Central Administration can be directly linked to the fact that the School Department had budgeted for only 16 employees in Central Administration but actually paid 26.

FY 03: The Superintendent claims in his full page ad that the School Department did not overspend in FY 03. Again, the ledger tells another story. Total overspending for FY 03 was $106,488.00. It is in this year (and NOT FY 02 as the Superintendent claimed) that the transportation rebid occurred (as required by law), and it is in this year that special ed transportation was overspent by $572,196.69, due to this legal requirement to send the contract out for bid. What is more difficult to understand is why the Central Administration Salaries line item was overspent by $390,689.51! This is a salary account and as such should remain relatively static. Again, the problem seems to lie in the number of employees budgeted vs. the number of employees actually paid. In fiscal year ’03, the School Department budgeted for 24 employees in central administration; in reality, the payroll for fiscal year ’03 lists 29 employees in Central Administration.

And again, the Teachers’ Salaries line item was under spent by better than a million dollars, at $1,033,455,47, and Instructional Education Expenses was under spent by $473,239.48. Based on this information, it is not unreasonable to question the School Department and the School Committee’s priorities.

The ledger indicates overspending occurring in these categories:

Central Administration salaries, by $390,689.51
Central Administration Miscellaneous Expenditures, by $78,504.63
Special Education Salaries, by 477,000.30
Special Education Tuition, by $413,543.07
Athletics Miscellaneous Exp. by $155,749.93
Maintenance Salaries, by $156,263.67
Student Handbooks, by $25,092.16
Water and Sewer, by $8,702.50


FY 02: Overspending in FY 02 totaled $235,232.17. FY 02 could be described as the proverbial “calm before the storm”, when an economic downturn cut state aid to cities and towns. This was also the year in which there appeared to be an interesting shell game being played in the School Department:

$600,000 was transferred out of the Teacher’s salaries account,
$150,000 was transferred out of Instructional Education Exp,
$135,000 was transferred out of Instructional Special Exp
$300,000 was transferred out of Maintenance Miscellaneous Exp
for a total of $1,185,000.

In this same year,

$435,000 was transferred into the Central Administration Salaries line item,
$450,000 was transferred into Special Education Salaries,
$300,000 was transferred into Maintenance Salaries,
for a total of $1,185,000.

Once again, Central Administration Salaries play a key role in the budget overages, receiving a $435,000 transfer of funds while the Teacher’s Salaries line item was reduced by $600,000! Looking at the budgeted versus actual numbers, the records indicate that while the School Department had budgeted for 26 employees in Central Administration, they paid 31 employees in fiscal year ’02. The bottom line was a year-end budget deficit of $66,083.76!

The ledger for the School Department paints a picture of misplaced priorities focusing on salaries and other expenditures for non-educators at the expense of things like teacher salaries and educational supplies. An argument could also be made, based on these facts, that the School Committee has been negligent in its role as overseer. As reported in a previous post, it remains to be seen whether the School Committee will step forward to answer the questions posed by members of the Common Council. The Mirror will make a report on the November 3 Common Council meeting in a future posting, and we will update this report as necessary should additional information come to light that might explain the documented overspending incurred by the School Department.