What we know is that funds were transferred from the 2009-2010 school year to the current in direct violation of generally accepted accounting principles (GAAP) as well as Department of Education directive. What we don’t know is how much was moved or if the DOE will take corrective action.
On How Much Was Siphoned:
So far, only the county attempted explanation. Regarding an encumbrance of $212,055.47, Interim County Executive Business Administrator, Ralph Goodwin wrote:
“Severance pay for administrators in the amount of $212,055.47 was encumbered by the district as a result of notice provided by two administrators of their intent to retire as of June 30, 2010. They then changed their retirement date over the summer to be end of this year and the board has taken action to confirm this. The prior year purchase order was liquidated which made the money available to the current year. That account will again be encumbered in the current year for the same purpose”.
In plain English, Goodwin claims Steve Gottlieb and Sylvia Ziegler announced their retirements as of June 30, 2010, which was last fiscal year. As the story goes, the two had a change of heart and decided to work an additional year, which makes their unused sick day payouts a current year expense. Now, prior year funds cannot be used for current employee expense. This a long standing accounting principle reemphasized in two Department of Education memos; one on 9/16/2003 and the other 5/12/2006. .
Of course many residents will say “so what? The district is obligated to pay and it really doesn’t matter which fiscal year is charged” but here’s the financial impact:
Last year’s operating loss of $2.3 million anticipated payment of the unused sick day obligation and it (the loss) was absorbed by RT taxpayers. But since last year’s cash is now covering this year’s expense, $212k of current year funds is free to be spent elsewhere. Thereby increasing future obligations. RT.residents will be taxed twice for the same expense.
Another $238,177.17 is currently in question. Ralph Goodwin implied that our district is self insured for unemployment and stated that staff reductions in the 3rd quarter of 2010 depleted our fund. The encumbered reserve of $238k was to replenish it. Well, possible staff reductions were announced on March 10, 2009 but there was no announcement that it came to fruition in fiscal 09-10.. Due to copyright laws.I’m prevented from presenting that Daily Record article written by Rob Jennings but the maximum staff reduction would have been a guidance counselor, education technologist and librarian plus 3 part time aides. Hardly enough to deplete our fund and require a 238K replenishment.
I’ve submitted an O.P.R.A request for documents supporting the calculation but have been denied access without valid reason.
So technically, strong suspicion surrounds the siphoning of $238,177.17.
Another $6,000 was siphoned from last to this year showing blatant disregard for established procedure.
Mathematically, this leaves $335k unaccounted for. There’s an accepted method to to test this number for appropriateness (is it all legit or siphoned cash?) . But curiously, school administration has denied access to those records too. I’ll keep you all informed.
What actions should be taken?
As I’ve stated previously the RTBOE has done little more than deny access to relevant documents and threaten legal action. Despite evidence to the contrary, County officials claim correct procedures were followed.
But the state has yet to weigh in and per the referenced 5/12 2006 memo, Abbott districts would have lost state aid for similar indiscretions. I suggest the local tax levy be reduced for every siphoned dollar.