As the result of a “special report” issued by its outside auditor, Groton-Dunstable school administrators outlined process changes they said will prevent the district from suffering future budget disasters like the one it is struggling with this year, Groton-Dunstable Regional School Committee members were told Wednesday, March 26. The process changes include identifying budget variances on a monthly basis and posting quarterly real-time budget performance reports on the school district’s website.
Among the improvements was the creation of a “Tri-Board” made up of representatives from Groton and Dunstable municipal officials — selectmen and finance committee members — and the School Committee so all can be kept better informed of the district’s “current financial status and discuss education funding needs.”
John J. Sullivan of Melanson, Heath, & Company told committee members that his review of the FY13 budget revealed gross under-budgeting of special education funds and reliance on an Excess and Deficiency fund that, once drained, finally couldn’t mask systemic problems.
“You froze your appropriations,” Sullivan said. “Over a three-year cycle, you had less than a one percent increase. As costs increase . . . a level funded budget isn’t going to accommodate that.”
Although originally blamed on “an accounting error” involving the use of an incorrect salary calculation formula in budget spreadsheets, only $300,000 of the original $2.7 million problem (now reduced to $1.9 million with further cuts) could be attributed to that error, according to Sullivan. In fact, the report does not mention the accounting error.
“The key here is that there is no illegal act,” Sullivan said. He said he has been involved with many of the big embezzlement cases that his firm has handled, “and I did not see that. My hope is that this report shows there are deficits and why those deficits occurred. But there is no concern that there are any missing money. ”
Sullivan said the report is not a true audit, which would cost hundreds of thousands of dollars, but a “special report” that focused on areas the administration identified as potential problems. This is the reason the report includes a disclaimer that it does not “constitute an examination in accordance with U.S. generally accepted auditing standards.” The report was delivered March 3, and distributed internally a week later. Wednesday’s meeting was the first in-depth discussion of the findings.
Director of Business and Finance Jared Stanton said he had budgeted $12,500 for the report, a “not to exceed” amount. He said in an email after the meeting that, “I expect it to, in fact, come in lower. This money has also already been encumbered.”
According to a document summarizing the budget issues that appears on the GDRSD’s website, the process changes are:
- The District will standardize its financial reporting by using the state Department of Elementary and Secondary Education’s (DESE) function codes for all financial reporting.
- Monthly, the School Committee will review the budget variance report and will review and vote on requested transfers between budget line items.
- Quarterly, the G-DRSD will post a year-to-date budget performance report, by DESE 1000 level accounts, on the District’s website.
- The District recommends creation of a Tri-Board made up of representatives from Dunstable town government, Groton town government, and the district. The Tri-Board will meet quarterly to review the District’s current financial status and discuss education funding needs.
- The District will define, document, maintain and follow a process for both budget creation and budget management. These processes will incorporate recommendations from past audits and the recent special report.
- The District will provide future year budget forecasts, initially looking three years out (FY15, FY16 and FY17)
Future year budget forecasts, requested by Groton selectmen and Finance Committee members since the budget deficit was revealed late last year, dominated discussion at the committee meeting. With a new superintendent starting in July and a new strategic planning process set to begin at the same time, board members were reluctant to commit to future budgets that do not improve the education provided by the district.
The first round of projections are included in the budget narrative on the GDRSD website, show a projected 2.9 percent increase in assessments for both Groton and Dunstable for FY’16. The next year, FY’17, Groton would see a 2.4 percent increase and Dunstable a 2.5 percent increase.
The document also included this disclaimer: “As the committee and community have yet to identify and verify anticipated costs for our district to improve its programs, projected local operating assessments include growth needed for baseline expenditures only.”
Download Budget Documents
- Download the auditor’s documents here.
- Download the 2015 budget narrative that interprets the budget here.