Politics is local and we can have the most impact on our school boards

Your superintendent is the highest paid, most powerful public official in the municipality. Do you know his name?

Elected board members, although well intentioned are easily led by their paid employees; teachers & administrators.

Do you know what they're all doing? Well here in New Jersey they represent at least 60% of your property tax bill and budgets grow at an astounding compound rate each year.

Saturday, February 5, 2011

Ignored DOE Advice

A frequent commenter, Bertram took exception to my suggestion that a federal grant for education jobs in the amount of $122,545 would be spent unwisely and grow future obligations as we face austere days ahead. Bertram commented that he or she was present when Superintendent Vitta warned  the board that no future grants exist  to maintain staff hired with the jobs fund.

While Vitta drew attention to the jobs fund, Verbist freed up $212,055.47 to be used in any manner the board desires, regardless of future impact.  By stealing funds from last year the board is able to pay severance to retiring building administrators, which is a current year expense.  As a result, $212k  in current  year funds are available to hire and sustain staff

Here’s how it works.  Because prior year funds are covering a current year expense, the new found current funds remain part of the tax levy and subject to 2% annual increases.

In the past, Abbott districts have been penalized for such chicanery with reductions in state aid but the Verbist/Vitta scam involves the local levy…not a state problem.

Our fist line of defense is elected board members but it appears they lack the technical skill to recognize the problem nor do they really care.

The above explanation shows why improper encumbrances violate GAAP as well as official DOE directives. Sign up for vote by mail and remind your neighbors as well



  1. Ted:
    Thanks for making me part of your opening line of this week's diatribe. First of all I am a HE so we can get that out of the way.
    Second, do you ever think before you write never mind look at what you write?
    If you read your own comments you have Verbist/Vitta using the money for severane pay and then in the next sentence you have them using the money to hire and sustain staff. Which is it? I met both of them and they are not bright enough to be able to use the same $200,000 twice. You may think those two are slick but they aren't that slick.
    Your back to the DOE agreeing with you on apparent violations. Did I miss something? Last I saw in your blog the county school official put you in your place and told you were wrong. I guess you are using the same strategy you accuse Verbist/Vitta of using. Using the same thing twice!
    You don't give those board people enough credit. They have the technical skills to recognize a problem. They recognize your the problem. You mislead the average reader with false information spun to make your cock & bull story look credible.
    I hope your not encouraging people to vote by mail so they can vote for you. It is a good strategy because if they saw you in the flesh and how you misdirect information they would never vote for you.
    Ted, tomorrow is the super bowl please don't root for the Packers because that would mean that your support would be based on misinformation and slight of hand. Do me a favor... root for the steelers.

    Go packers!

  2. Bertram, Apparently you don't understand what was written. Accounting is based on a matching principle, a system whereby revenues and expenses are matched in the fiscal period recognized.

    In this case, Verbist/Vitta are matching prior year revenue with a current year expense and the action impacts prior, current as well as future fiscal periods.

    Last year's reported loss was $2.3 million but would have been only $2.1 had funds not been encumbered in violation of DOE directives

    Now that the funds have been transfered to pay current year expenses, an equivalent amount of current year revenues are available for discretionary spending, which becomes part of the budget, which increases at the compound rate of 2% per year.

    If you take the time to ask, my "story" would be verified by any accountant student through the managing partner of the largest CPA firm.

    PS, I will not be running for the RTBOE.

  3. Ted:
    Keep rooting for the Steelers.

    Since I attended Wharton School of Business (sorry to be a name dropper) I think I understand the concept of accounting principles 101- revenues must equal expenditures.

    Your apparent 2.1-2.3 million dollar loss if I have the school accounting process correct is not a real loss but a paper loss due to the state's payment of the pension on behalf of the schools. If I'm wrong publicly embarrass me. According to what I remember from the audit night they had a slight year end surplus.

    You’re back to a violation of state directives. Didn't we visit this story several times? Remember, you published that the state disagreed with your allegation. Did you someone in the afterlife channel you and predict you were going to find someone in the state to reverse themselves and agree with you?

    If I have this correct you believe they moved 200,000+ into this year from last year which will create a 200,000 additional in discretionary spending. I will make a visit to the schools and look into your assumption. If you are correct I will publicly credit you for a job well done and question the schools on their decision to increase the expenditures and revenues. If you are wrong (again) I will as promised ask you to admit your mistake and be a man.
    As to your "story" comment I don't need to ask an intern if you are story is correct. I will stipulate that you got at least one thing correct - expenditures must equal revenues. Yeah Ted you scored! Are you going to Disney World?

    Don't not run on my account. If you think you can represent our community better than the others running then run and let the people speak. You may make a better board member the second time around than your first foray into school board membership.

  4. Wrong Bertram, the operating loss is real. It's simply expenditures in excess of revenue and that loss was fully absorbed by prior excess revenue (local levy) over expense. That is to say, we're talking real dollars.

    Now transferring cash before the well ran dry increased the loss and freed up current year funds. Again, real dollars not imagined.

    Also, the state did not disagree with me. An interim county school business administrator merely rendered his opinion. Verbist will need better than that to trump written directives from a DOE Director of Finance and DOE Commissioner.

    The new found $212k discretionary is not an assumption, it's a mathematical fact. And because prior year funds cover a specific current year expense, the defacto increase in discretionary funds is not tied to any planned expenditure...hence the term "discretionary funds". If you are indeed an MBA, I'm betting your emphasis was marketing or public relations, not finance.