Ridgefield’s off-budget school accounts draw attention
Over $2 million in 11 school-related accounts that exist outside the normal flow of taxpayer funds through the $100 million annual school budget have become a focus of interest and discussion among town and school officials.
“How are we going to go forward looking at this? Do we hire an auditor?” First Selectman Rudy Marconi asked the Board of Selectmen’s May 27 meeting.
That decision will be made by the Board of Finance — the monitor of town finances under the charter.
“We are audited every year, and these particular accounts have never come up,” finance board Chairman Dave Ulmer told The Press in a May 28 email.
They’ll be discussed at the finance board’s June 16 meeting.
“...We will ask for, and hopefully get more information on historical balances, plus source and usages of funds in each account,” Ulmer said.
School officials emphasize that school finances are audited annually, and involve money from numerous non-taxpayer sources.
“All our bank accounts are reviewed, reconciled, and audited by the external audit firm,” said a response to the May 28 email The Press sent to school business manager Dawn Norton, Superintendent of Schools Susie Da Silva, and school board Chairwoman Margaret Stamatis.
The accounts are on the agenda of a meeting of the school board’s Budget, Finance and Operations Committee on Tuesday morning, June 2, at 8 a.m., which will be livestreamed on the school system website, www.ridgefield.org.
The selectmen recommended that the finance board create a committee to research the accounts, the sources of the funds in them, and what can and can’t be done with the money.
“Rather than going outside and hiring an auditor, if we were to appoint an internal committee of somebody from Board of Education, the Board of Finance and the treasurer,” Marconi said, “to put together some kind of a report to satisfy everyone, especially the public, to be sure everything is fully transparent, and has been addressed.”
Superintendent Da Silva didn’t object to that recommendation, but suggested doing a “request for proposals” to see what professional auditing might cost.
“Ultimately, I do believe an RFP to have an independent auditor would be best,” Da Silva told the selectmen’s May 27 meeting. “...I think somebody outside of the organization would be most helpful.”
Taxes, other funds
Town taxes fund roughly $135 million of the $150 million town and school budget, with the remainder coming from sources that range from license and permit fees to grants, interest, fines.
The school system spends about $100 million of the $150 million annual budget, and returns year-end surpluses — often in the hundreds of thousands of dollars — helping build the town’s $15 million fund balance.
This year the schools expect to return more than usual — about $1.3 million — since the coronavirus closed schools early, reducing costs.
Town Treasurer Molly McGeehin drew attention to the 11 accounts, which totaled over $2,048,000 and she did a “snapshot” accounting in late April.
McGeehin outlined her concerns — including that taxpayer funds may be mixed with other money — in a May 25 email to First Selectman Marconi, finance board Chairman Ulmer, Superintendent Da Silva and school board Chairman Stamatis.
“It is clear that there is quite a bit of fund commingling that needs to be investigated and separated so that unspent Town funds are returned to the Town coffers annually,” McGeehin wrote. “At a minimum, there needs to be documentation of each account as to its purpose as well as the sources/uses of its funds. The fact that such documentation does not exist is outside accounting best practices.”
Although the accounts have somewhat descriptive titles, McGeehin argues the sources and purposes of the funds aren’t adequately clear.
As McGeehin documented them in late April, the accounts were:
“BoardEd-Spec. Rev - Donations” — $552,706;
“Ridgefield High School” — $392,191;
“Adult Education”— $36,655;
“Bd Ed Summer Learning” — $4,857;
“RHS Savings” — $281,197;
“Bd Ed - Scotts Ridge” — $55,978;
“Bd Ed East Ridge” — $25,422;
“Bd, Ed. - Imprest” — $250,486;
“School Lunch” — $160,883;
“Bd Ed - State Grants” — $181,505;
“Bd Ed - School Rental” — $162,210.
“Given these worrisome financial times, it might be in Ridgefield’s best interest to ask the questions again — what are each of these accounts used for? How were they funded?” McGeehin wrote in an April 26 email to Marconi and Controller Kevin Redmond
School officials suggest concern over the accounts may be overblown.
“There appears to be a great deal of confusion on our bank accounts,” said the May 28 email rresponse from Norton, Da Silva, and Stamatis.
“...The Board of Education is authorized under State Statue Sec. 10-237 to have bank accounts where the source of funds is not the municipality. Given this statute we have the following bank accounts:
“School Lunch account which is money from parents or guardians to pay for students meals;
“School Activity Funds, each school has a specific bank account that holds money from parents or guardians for field trips, to pay for testing, proms, student banquets, parking fees, etc. including funds raised by the students;
“A grant account that holds the money we get from ... grants such as Title grants, IDEA, Perkins, etc.;
“We have a school building rental account where we put funds when we rent out our buildings to outside organizations or individuals;
“Adult education fund where we collect money for programs we offer to adults;
“An imprest account which we use as a pass-through account where we deposit money received for workers’ compensation, fingerprinting, property insurance settlements, account payable refunds, overpayments, or rebates, etc.
“...All activity, grant, donation, school lunch, and school building rental bank account(s) do not have any general fund taxpayer dollars associated with them and therefore can only be used for the purpose of the funds deposited and can never be used for general fund operating or to be returned to the town.”
McGeehin’s April 26 email to Marconi and Redmond focused attention on one seemingly forgotten account:
“Of particular note is account x1967, ‘RHS Savings’ which has been dormant since 2013 and potentially prior as I only go back 7 years...
“Two issues here:
“the BOE is not exercising financial responsibility by keeping several hundred thousand dollars in a savings account earning less than 1% when CDs were available @ 2% even when it was brought to their attention;
“more importantly, since that account has not been used for at least 7 years, the BOE should release the $281K balance for use in the budget.”
In their email to The Press, school officials acknowledged the dormant account should be reviewed.
“One of our High School activity accounts has not had activity in many years. This is the dormant account that has been brought up. We are actively working to research the details behind this account and why it was left the way it was by whichever class or classes graduated,” they said.
School officials also addressed concerns about an athletics account in which the annual appropriation from the town is supplemented with money from the $225-per-sport pay-to-play fees charged to athletes, rental income from gymnasiums, and gate receipts from games.
It had come up in the selectmen’s May 27 discussion.
“I would ask to look at athletic fund account,” said Selectwoman Maureen Kozlark. “I still don’t understand how they can be commingling budget dollars the town is providing and pay-for-play and gate receipts and rent…”
The three school officials said: “One additional account that has been talked about was the Athletic Fund. This is something that was put in place back in 2004-2005 or 2005-2006 when the pay-to-participate funding model was established and has been functioning as it stands ever since. We have had many conversations over this account and how it was set up.”
No forensic audit
McGeehin hasn’t suggested school officials are doing anything illegal — just that bookkeeping should be tighter, and more interest could be earned.
In her May 25 email to town and school officials, McGeehin dismissed the idea — raised in one discussion — that a “forensic audit” was needed.
“I don’t agree that it should be a ‘forensic’ audit — ‘an examination and evaluation of a firm’s or individual’s financial records to derive evidence that can be used in a court of law or legal proceeding’ or ‘an examination of financial records to find any illegal financial activity,’ ” McGeehin wrote.
She offered to help investigate the accounts — including going through old boxes in the school offices believed to hold “historic information” on them.
“I believe a fresh perspective is in order and would like to volunteer my services so no additional expense will be incurred,” she wrote. “Not only am I qualified as a CPA and former financial auditor with Coopers & Lybrand but I have an MBA in Finance and have had the experience of walking into a position that needed ‘a fresh set of eyes.’ ”
The selectmen recommended she serve on the committee.
“There are lots of years worth of boxes that are going to need to be gone through, and they’re billable hours by an auditor,” said Selectwoman Barbara Manners. “I’d certainly support the idea of a committee doing it … a member of the Board of Finance, a member of Board of Education, and Molly.”
Controller Redmond confirmed that hiring an auditor might get expensive.
“It’s going to cost,” Redmond said. “I think the last time we engaged someone it was in ’07, I think the Board of Finance paid $50,000 for Kostin Ruffkess to look at Board of Ed encumbrances — and that actually didn’t find anything.”
“Do you think this should be a recommendation to the Board of Finance, since by charter they’re charged with the financial viability of the Town of Ridgefield?” Marconi said.
The other selectmen agreed.
“As we’re going through this,” Selectman Bob Hebert suggested, “it would be a good opportunity to review the best practices, policies and procedures, so we don’t have to be in this position again.”