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p-schoolaudit Accounting flaws still plague School Department

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p-schoolaudit Accounting flaws still plague School Department

PORTLAND — A new audit of school and city finances reveals some of the same deficiencies in the School Department's accounting practices that led to nearly $2 million in overspending in 2007.
Accountant Kathy Tyson, of the firm of Runyon Kersteen Ouellette in South Portland, told a joint meeting of the city and school finance teams Tuesday that differences in computer software used by the School Department and City Hall finance offices makes it difficult to reconcile the municipal books.
Her report said the two systems should be reconciled at least on a monthly basis. The city and the schools only do so every few months now – if at all.
"If those two systems are not reconciled there could be misinformation contained in your financial reports," she said.
The audit also found that failure to adequately track expenses and revenues has left he schools out of compliance with the City Charter, which requires any school spending over the budget to be approved by the City Council.
Both problems were were identified during an audit of the fiscal 2007 budget, which showed the schools suffered a $2 million budget deficit. That led to the resignations of former Superintendent of Schools Mary Jo O'Connor and former School Department Finance Director Richard Paulson in the summer of 2007.
The district was also nearly $475,000 in its last fiscal year, which ended June 30, 2008.
School Finance Director Herb Hopkins, who was hired last February, said circumstances have prevented him from implementing proposed solutions. Those circumstances include the ongoing struggle to meet the state's $2 million curtailment in education subsidies for the current year and problems implementing a new state-mandated chart of accounts.
"I'm disappointed we haven't been able to do more reconciliation," he said.
Hopkins said there was confusion near the end of the fiscal year about when certain payments were made. But now that the schools have nearly implemented new software, Hopkins said he will have more time to work on other issues, such as refining job descriptions that will specifically assign budget duties to central staff.
The audit recommended the district hire an accounting manager, a position vacant since April 2008, to oversee expense and revenue accounts. The manager would report back to city and school administrators and the School Committee on a regular basis.
Interim Superintendent Jeanne Whynot-Vickers said she had hoped to parse out the responsibilities of the accounting manager to current central office staff.
"We tried to use existing personnel, but it hasn't worked," said Whynot-Vickers, who said she would fill the position next month.
Auditors also recommended the district implement better oversight of grants. But school administrators said they have a part-time employee oversee those accounts and, with the successful implementation of the new state software, the district will be able to better track grants.
Auditors also recommended the school administrators conduct random compliance checks on school activity funds. Inconsistencies were found, they said, in the use of high school vouchers and, in at least one instance, an employee at Portland Arts and Technology High School wrote a check to "cash."
City Councilor John Anton pressed school administrators to set firm deadlines for implementing the auditor's recommendations, and then meet those deadlines. He noted that, while administrators told auditors they intended to hire an accounting manager by January, the position remained unfilled.
Anton said he is particularly concerned about how the school overruns would affect the city's fund balance, which helps determines the city's credit rating, but has been used to pay down school debt. In the current budget, the School Department paid back $600,000 towards the $1.2 million owed from the 2007 deficit. But much of that debt returned with the 2008 overrun.
The School Department's ability to reconcile deficiencies will ultimately determine Anton's support for the upcoming budget, he said.
"To have confidence in the next budget, I need to have confidence that we have addressed the issues," Anton said. "It's reaching a point for me where these continuing issues become difficult for me to countenance."
School Committee member and finance Chairwoman Kate Snyder said the committee will discuss the auditor's report in depth at its Feb. 23 meeting.
"We've been looking at this report and talking quite seriously about the implications it has for building this year's budget," she said.

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net.
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