School audit reveals up to $700k shortfall

Vermont Standard


By Allan Stein

Standard Staff

The bad news is that the Windsor Central Supervisory Union (WCSU) is facing a potential FY19 budget shortfall of $200,000 to $700,000, as discovered in financial audits.

“The good news is the bleeding has stopped,” WCSU Superintendent Mary Beth Banios told members of a finance subcommittee on March 4.

In a Feb. 29 letter, Banios said that as a result of, and even before, the 2019 merger, “things have been missed.



“It was certainly a mistake on my end to not arrange for the FY18 audit presentation to the board after the previous finance director had indicated that it was complete. This would have brought to light the issue that the audit was not complete,” Banios said.

Banios said it “appears that it is likely” that past finance director Richard Seaman “made several errors when building out district budgets during his five-year tenure, both pre- and post-merger, and this may have an impact on future budgets.

“These errors have been picked up as part of the audit process and as a result of the hard work of (current finance director) Michael Concessi. Though unwelcome and challenging, these budget issues are solvable.”

The potential deficit was brought to light during a presentation from the auditor regarding the status of school district financial audits and fund balances, March 4.

The deficit situation is “fixable,” independent auditor Ron Smith of RHR Smith & Co. told members of an WSCU School Board finance subcommittee.

Smith said that in FY2016 the supervisory union had accumulated a $1.2 million budget surplus, comprised mostly of unrestricted funds.

Using a “calculated” spending plan, those funds were spent — $840,000 for tax relief in FY2017, and $439,000 to support the FY2018 budget.

Although the money had already been allocated, the WSCU finance office budgeted additional surplus funds for use in the FY19 budget, Smith said.

“That money was not there, neither was it ever transferred,” Smith said. “This is why we need to get caught up, and caught up now. Obviously, 2019 didn’t go as planned. Who paid for that? Who, what, when, where?”

Banios, at the meeting, said the potential deficit is due to “math errors” that culminated in a “perfect storm happening.”

Smith said there were “some misunderstandings” that were given the “benefit of the doubt.”

“This is all fixable. Period,” he said.

On March 23, WSCU officials and Smith will meet to discuss various options to resolve the potential deficit, Banios said.

In an email to the Vermont Standard, Banios said that “all FY19 audit reports are on track to be complete by March 31 and we fully anticipate meeting our statutory obligations of filing our WCSU FY19 audit with the state Agency of Education by March 31.”

“This is a solvable problem with a lot of potential solutions,” Banios said.

Banios explained that audit reports are produced at the supervisory union level, and for each school or district “they also receive a Letter of Acceptance by the auditor once all of the auditors’ questions have been answered.

Banios said the required WCSU FY18 audit report and Letter of Acceptance were filed on time for that fiscal year in late March 2019.

“The supporting school/district audit reports that are not required to be submitted to the state were also complete last March and books were closed, but due to some lingering questions from the auditor that had not been answered by the former finance team the Letters of Acceptance had not been issued for these reports,” Banios said in the email.

“Before moving onto the FY19 audit for this year, our new finance team had to respond to these questions in order to receive the final Letters of Acceptance for each school/district. All questions have been answered by our new finance team and now all FY18 audit reports have received their Letter of Acceptance. Different schools/district received their Letters of Acceptance at different times from October 2019 to February 2020,” Banios said.

However, unlike state numbers, “the timing and completion of an audit is something we have control over. As we continue to evolve as a new district we need to push our time lines up on the audits so that this information can inform the next year’s fiscal budget,” she said.

Banios added that, “for oversight purposes,” audit reports are typically shared with the WCSU board and the AOE. “They tend to be dense and technical documents and are not usually sent out to taxpayers. This being said, the audit reports are public documents and taxpayers can request them at any time.”

Concessi replaced Seaman as finance director for the supervisory union in November 2019.

“In light of the complexities of the (2019) merger and changing chart of accounts ... there were structural deficiencies in how the budgets in FY19 and FY20 were built, we believe we have found and correct(ed) the vast majority of these errors in the FY21 budget,” Banios said in her email.

At annual town meetings last week, voters in five of seven WCSU member towns approved a $21 million school district budget for FY21, which begins July 1. Reading and Killington rejected the budget proposal.

Killington rejected the budget proposal, 239 to 112, because many voters “did not have enough information to make an informed decision,” Killington Town Manager Chester Hagenbarth said in a letter, which he read to the WSCU School Board on March 9.

“We wonder why we’re in this hole. I’m really frustrated that there was a budget for FY21 that was passed,” said James Haff, one of Killington’s two school board members.

“If you don’t know what’s in your checking account, you don’t know what’s there is to spend in 2021,” he said.