SOME OFFICE SEEKERS still try to sell voters that old snake oil: Government should run more like a business. What kind of business do they have in mind, a Wall Street bank?
Nobody would be foolish enough to buy that hogwash given what we now know about how big banks fleeced their customers. Nobody thinks the public sector should accumulate vast sums of money “just because.” No, nobody… except the Germantown Central School District Board of Education, which state auditors discovered has done just that.
After a scandal on Long Island in 2005 in which some school district administrators and their cronies embezzled or misused over $11 million in school funds, the state legislature gave the Office of the State Comptroller the task of auditing school district budgets. The comptroller’s audit team has just released the results of its review of the Germantown School District from 2008 through May 2013. The auditors found no evidence or suggestion of criminal behavior. None at all.
What the auditors did find was a breathtaking disregard for the legal requirements of budgeting set by the state and what can only be described as a disdain for the taxpayers the board was elected to serve.
For at least the last four years, said the auditors, the board “… levied more real property taxes than necessary and retained large amounts of taxpayer dollars without full disclosure of how these funds will be used.”
Who cares if the state gives the district an administrative spanking for its fiscally conservative approach? After all, setting aside some extra funds for a rainy day sounds reasonable. And it is, except there are rules. State law limits the amount of unrestricted funds (unspent tax money) that can be put in the bank for unanticipated expenses in the following year: just 4% of next year’s budget. But the Germantown board, which approved a budget of $13.5 million, put aside $2 million in the most recent examined. That’s about four times the amount permitted by law. If you live in the Germantown District, it’s your money sitting there.
The board accumulated these funds by overestimating budgets year after year. The historical trends showed that the board taxed citizens for more than the amount required to operate the district and maintain reasonable reserves, and still they continued to inflate the figures. It’s as if they believed their neighbors wouldn’t mind contributing their hard-earned money to… nothing.
The auditors have more scathing observations on the practices of the board, but one stands out as particularly troubling. Over the last four years the board has overstated salaries by $2.7 million. The cost of benefits was also grossly exaggerated. Meanwhile the district’s teachers have worked without a contract for more than two-and-a-half years. That begs the question, was the board cynically manipulating voters with misleading figures about how much it cost to pay teachers? Was this all an effort to pressure teachers to settle? What other reasons could the board have besides its own incompetence or a lack of attention to the job that board members were elected to do.
District Superintendent Susan Brown was appointed last July, long after adoption of the current budget. Her job will be to oversee damage control and to make sure the hoarding of taxes doesn’t happen again. It was Ms. Brown who signed the three-page letter listing the steps the district has agreed to take to clean up the mess, accepting all the auditors’ conclusions without protest except to note, “Budgeting is obviously not a precise science.”
Maybe the mea culpa letter to the state came from her because she’s not associated with the scandal. But in case anyone isn’t clear who’s responsible here, the audit says that the president of the board is the district’s “chief fiscal officer” and that “responsibility for accurate and effective financial planning rests with the Board, the Superintendent and the Business Manager.” Note who comes first.
The corrective steps stemming from the audit are necessary but insufficient. For instance, instead of just promising the comptroller they won’t misbehave again, board members should adopt a resolution requiring that an independent auditor review the annual budget proposal prior to the public vote and certify that the fund balance approved by the board does not exceed the 4% limit.
And since the board so clearly misunderstands the science of budgeting, each member should pledge to attend the annual conference of the New York State School Boards Association, where they might learn something about handling other people’s money.