Public fights for understanding at school board meeting

By 12:45 a.m. on Dec. 15, a resigned, almost conciliatory atmosphere pervaded the gymnasium at Lenox Elementary. Two of the last commentators of the evening commended the school board on its hard work, but voiced their concerns about the board’s accounting transparency and the timing of its announcements. The 50 or 60 remaining residents shuffled out tired but better informed, and there was a sense of accomplishment as participants packed away their papers.

If the meeting’s wrap-up was genial, however, its beginning and middle were anything but. At issue were a $4 million budget deficit, the prospect of school closings, staff cuts and an audit by the state comptroller that had recently been made public. The meeting was standing room only, with 150 to 200 residents filling the seats and lining the walls of the gym. Questions ranged from simple requests for information to full-throated expressions of vitriol. The board, chaired by Mary Jo O’Hagan, took each in turn and attempted to steer an impassioned gathering to a better understanding of the circumstances.

Many residents, waving copies of the comptroller’s audit, were under the impression that the board had been found guilty of financial impropriety. According to the board, however, financial oversight is a routine part of school business. Treasurer Ed Cullen also pointed out that the audit had been conducted over a year earlier, and that many of the areas where board and state policy diverged were being reconciled.

The audit

The audit at issue was titled “Baldwin Union Free School District: Internal Controls Over Selected Financial Activities,” and dealt with the time period July 2008 to May 2010. It examined the district’s budget processes, unreserved fund balance practices, the establishment of an Employee Benefit Accrued Liability Reserve and other items, including the way the board collected bids for services and the security controls it maintained over an electronic signature disk.

The most inflammatory section of the audit read, “We estimate that between accumulating fund balance in excess of the statutory limit and significantly over-funding a reserve, the District has accumulated more than $12.1 million in taxpayer funds inappropriately. … The Board routinely adopted budgets that included appropriations in excess of what was necessary. From the 2006-7 through 2009-10 fiscal years, the District overestimated expenditures by a cumulative total of $17.2 million.”

These charges were repeatedly characterized as “scathing” by questioners, who said they could not understand why the $17.2 million excess could not be used to bridge a $4 million gap in the district’s predicted operating budget for next year.

“Keep in mind, these are the opinions of the comptroller,” Cullen said. “The accounting view over the years has changed regarding what can be included in these funds.”

The money Cullen referred to was an unassigned fund balance — a store of money for emergency purposes — and the Employee Benefit Accrued Liability Reserve, or EBALR, which the comptroller described in 2008 as “monies to make cash payments to employees for accrued leave time due to them upon separation from school district employment.”

The board’s stance was that the funds had been accrued transparently, over a period of several years and in accordance with state guidelines, but that the guidelines had changed. Several trustees also pointed out that the reserve balance was drained during the budgeting process last year in order to avoid cutting school programs.

“That audit was completed more than a year ago,” said O’Hagan. “Those funds are now gone.”

Kimberly Malone, who said she was a seven-year resident of Baldwin, was enthusiastically applauded when she told the board, “We’re frustrated. We don’t know who or what to believe.” Another attendee, Patrick Keating, said he owns four homes in Baldwin, pays more than $50,000 in property taxes and did not understand how, in spite of the substantial contributions the community makes to the schools each year, there is a lack of money.

“We are no different than any other school district,” replied a frustrated trustee, Kim Taylor. “We’re struggling to maintain our amazing program. We don’t like to do these things, but we’re doing what we have to do.”

Throughout the tense but controlled session, the board struggled to make it clear that Baldwin was not the only district subjected to an audit. “These audits are virtually random,” O’Hagan explained. “They audit all kinds of things — special education, for instance. And they’re looking for things to nitpick. It’s a little like when you have a house inspection. They provide you with a list of problems and you decide what to fix now, and what to put on the To Do list for another time.”

The sweep of audits encompassed the 421 school districts in the state that created EBALR funds. According to a report from the state comptroller’s office, “251 districts have allocated far more funds (an estimated $407 million) than they actually need to meet their liability for leave time accruals.”

Battling the impression that the Baldwin board had been found guilty of impropriety, O’Hagan mentioned several times that the board subjects itself to an ongoing audit process by three independent auditors. “We have three separate auditing services,” she said. “We have public reports by an external and an internal auditor frequently. Those are on our website. We have not had any questions on any of our practices. We’ve received clear marks from all of our auditors.”

But many in the audience remained skeptical. “It seems that while some of your financial policies are not unlawful, they’re just not the best practices,” said Antoinette Porter. “To the public, it seems like you’re protecting your own.”

Beyond the audit

As clocks ticked past 11 p.m., questions about the audit gave way to discussion of the tough decisions the district faces in the future. The facts are well known: The schools’ current budget is $4 million short of what the board believes they will need next year. The board cannot raise property taxes beyond the limits established by a statewide cap of 2 percent on such levies, so drastic cost-cutting seems inevitable.

“Everything is on the table for cutting costs,” O’Hagan said, meaning that the board will consider closing schools as well as cutting non-mandated programs, adjusting transportation services and doing away with all-day kindergarten.

The most hotly debated issue was the closing of schools, which residents like Keating and Malone worried would lower their property values and destroy the quality of their neighborhoods. Other parents, however, said that closing a school would be less detrimental than cutting programs like the arts.

“To me the last things we should cut are extracurriculars,” said Joel Press, a parent who worked on a budget presentation for the Baldwin Education Assembly. “If my kid has to get on a bus to go to a school where she also gets to play violin, I say put her on the bus.”

Laurie Fitzpatrick, the mother of a ninth-grader and a recent top-10 graduate from Baldwin High School, agreed. “If we cut the arts and the extracurriculars, we won’t get kids going to the top schools in the country,” she said. “I just read about a small school which cut its extracurriculars, and the valedictorian and the salutatorian couldn’t get into SUNY Geneseo. They just didn’t have the extra things top schools are looking for.”

Other residents sought to redirect blame from the school board to the state. “It’s very clear what the problem is,” said Joel Peskoff, another member of the Education Assembly. “It’s on the state level. It’s not on the local level. Don’t come here to express your frustration. Write letters to your congressman, your senator.”

Throughout the budget process, the board has maintained that school closings are only one of many options it will consider to save money. The board has convened a Facilities Task Force, which toured five of the seven elementary schools in the district — two schools are not being considered for closure — and it is slated to give its recommendations at a community input meeting on Jan. 25. The board will announce its decision, based on the task force findings, at the Plaza School on Feb. 8.