WVN #387: Report finds school accounting wanting
- Dear Wayland Voter,
A consultant is highly critical of the way Wayland schools manage money.
Also in this newsletter:
-- A water surcharge that often exceeds the cost of the water itself is under fire, and the Board of Public Works is listening to the public.
-- As Wayland named a new superintendent, the second-ranking school official was a candidate to become superintendent elsewhere but didn't get the job.
DRAFT REPORT FINDS SCHOOL ACCOUNTING LACKING
"Scorching" and "scathing" are two adjectives directed at the Operational Review draft report, conducted by an independent consultant, concerning the school's accounting and budgeting practices. The study makes it clear that there is ample room for improvement, especially on the school's budgeting and reporting structure.
The school department's new business manager, Geoffrey MacDonald, has started addressing the bookkeeping issues. For example, he is using the town's accounting software, Munis, and is working to make the code usage consistent and to clarify offsets so the School Committee can see the true cost of all programs.
A few of the report's more notable items on the school side:
-- The "Proposed Budget does not meet most budget standards or criteria as published by GFOA (Government Finance Officers Association) and ASBO (Association of School Business Officials International) and does not meet the standard of several other school systems." Among the elements lacking: historical actual spending and staffing for two prior fiscal years. The current practice is for one year of actual spending, and even then adjustments have been made to reflect budgeted rather than actual expenses during Fiscal 2010, when a spending freeze was imposed.
-- The School Committee is the policy setting body and the school business manager should report directly to the School Committee and provide regular updates. The School Committee should be informed of minor changes to the budget and should approve changes that relate to policy. Instead, the school business manager has long reported to the superintendent in Wayland. The practice in Wayland has been for the superintendent to assume authority to shuffle money within the budget and to merely inform the Committee of significant changes without asking for approval.
-- The town should establish procedures ensuring required reports are submitted to the state. Wayland has neither prepared nor filed required Compliance Supplement reviews for FY 08 and 09 with the Department of Elementary and Secondary Education (DESE). And "the FY 07 Compliance Supplement Report that was submitted had no findings. The normal protocol is for the Compliance Supplement to be submitted by the independent audit firm to the School Committee for review, discussion and acceptance." The report recommended the business manager and the independent auditor conduct a review of the FY 07 statement.
·The DESE also requires a written signed documentation regarding the basis of the indirect cost methodology, and this also does not exist, the report stated.
The report also made accounting recommendations that will facilitate interim assessments of the budget and some clarification of categories.
The report is available at http://www.wayland.ma.us/Pages/WaylandMA_BComm/Finance/WaylandReport.pdf The text is 20 pages; the remainder is examples and appendices.
The consultant's study was prompted by a petitioners' warrant article at last year's annual Town Meeting that sought to clarify the budget allocation within the school and was then expanded to encompass the town as a whole. Many residents for years have sought without success to understand how the budget allocations one year compare with those of another year. The warrant article stated the independent review should provide:
"1. a comparison of current budgeting and expenditure reporting formats used by the Wayland Public Schools with formats used by peer towns with recommendations for improvements in Wayland's budgeting and expenditure reporting formats, including level of account detail, consistent with best management practices;
2. a restatement of FY2011 budget at a detailed and subsidiary account level in the recommended best management practice format with testing to validate budget classifications subsequent to modification of budget format;
3. a specific recommendation on expenditure reporting that captures variances in actual expenditures from budget at a detailed and subsidiary account level to improve decision-making and to provide better accountability to citizens; and
4. a review of non-educational operational and administrative functions identifying efficiencies within the School department and like areas within Town operations, to include recommendations for areas for potential alternative service delivery methods and cost-savings strategies such as consolidation with Town departments, collaboration with other school districts, or outsourcing. "
A committee was formed to oversee this effort, and has a page on the town's website: http://www.wayland.ma.us/Pages/WaylandMA_BComm/Finance/Operational
-- Molly Upton
CROZIER UNSUCCESSFUL CANDIDATE IN MARBLEHEAD
Wayland's assistant superintendent of schools, Brad Crozier, was a finalist for the position of superintendent in Marblehead but didn't win the job. This occurred as Wayland selected Paul Stein, deputy superintendent in Newton, to replace retiring Gary Burton as superintendent. Negotiations are ongoing with Stein.
TWO CHANCES TO AIR WATER RATE VIEWS
Citizens have two opportunities to air their views on water fees and surcharges: a public hearing this Tuesday, Feb. 8 at 7:30 p.m. and at a rate-setting hearing in early March.
Change is on the way regarding water usage fees and the surcharge for water borrowing costs as the Board of Public Works (BoPW) recognizes that the rate structure should be modified so smaller users don't bear such a large portion of the capital surcharge. The BoPW is actively soliciting opinions and suggestions.
The Abrahams Group's interim report on the water department's fees and assessments for capital improvements has sent the Board of Public Works scrambling for more equitable alternatives. The report was commissioned by the BoPW after much outcry from citizens over the flat $236 annual fee, regardless of water usage. The consultant also prepared the report on school and town accounting practices. The report on water fees can be viewed under "Timely Information" on the home page of the Town's website
The water department now has $2.5 million in reserves, which the consultant deemed excessive. DPW Director Don Ouellette attempted to defend that amount as a percentage of the cost of the Baldwin Plant.
The report revealed that although the annual $236 surcharge was allegedly to cover the cost of borrowing for the Baldwin Treatment Facility, in fact it covers all the water department's capital debt. So there's a good chance the surcharge will be reduced.
Further, the charge was assigned to each water meter. But many multi-unit buildings have only one water meter, so not every household unit has been subject to the surcharge.
Although the current focus in Wayland is how to fairly assess costs for water, related questions have arisen, such as whether Wayland be in both distribution and sourcing of water as it is currently, or simply distribution, drawing upon the Massachusetts Water Resources Authority (MWRA) supply, which traverses the town via two aqueducts and a chunnel. MWRA water has always been regarded as much more expensive than local well water, but the cost of the treatment plant may have altered the equation. On the other hand, the treatment plant is already built. And there are towns planning to build similar treatment plants to reduce their dependence on MWRA water.
On usage fees, the BoPW is strongly considering eliminating the minimum usage fee of $50 for 1500 cubic feet, and replacing that with a fee that covers administrative cost. Usage fees would then begin with the initial amount of water used. Thus those who use little water would see this reflected in their usage fees.
The board asked Abrahams to prepare three alternative billing methods to present to the public:
-- Retain a similar fee structure but reduce the capital surcharge to cover only the Baldwin plant debt.
-- Combine the administrative and capital surcharge, and start usage fees at the first unit of consumption.
-- Charge a fixed administrative fee and combine the capital fee into the usage rate structure.
Changes in the usage tiers and charges are also under consideration.
The capital surcharge constitutes 32% of the total annual revenues of $3.5 million, and is billed as part of the minimum usage fee. Combined with the minimum fee of $50, 45% of all revenue falls on the tier of users who use the minimum water allocation, according to the report. "To place 45% of all revenue on the minimum places too much of the revenue burden on the minimum tier," the report stated.
Multi-unit housing, municipal, commercial users and schools are among the top 28 users. The middle school is the largest user, followed by Sunrise, Traditions, Wayland Housing Authority, and Russell's. Four individual residences were among the top 28. Nine of the top 28 accounts are municipal.
As a means of ensuring some changes are made to the billing scheme in the interest of equity and fairness, there will be a petitioners' article at the April annual town meeting. One advocate for change, resident Mike Lowery, says that for more than two-thirds of meters the current surcharge exceeds the charge for water.
"Small and medium water users are subsidizing filtered, treated drinking water on the large lawns of the largest water users," he said. "This is unsustainable and insupportable."
The BoPW issued a news release this week naming many areas it is working on, including water charges. See:
According to its posted agenda, the BoPW is expecting consultant Mark Abrahams and former Water Commission chairman Joel Goodmonson to attend the Feb. 8 water rate public hearing, with an hour set aside for public comment:
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Wayland Voters Network
Michael Short, Editor