"I am conducting an internal review of the health insurance line and the manner used to project employee contributions, School Superintendent JeanAnn Paddyfote said in a story by Nanci Hutson in today's News-Times. "When the internal review is concluded, the information will be shared with the Board of Education."
Sure. Sounds like the fox/henhouse fable to me. And what do you suppose that this "internal review" will likely find? Uh-huh. I agree with you. Nothing. That's why I believe that the Town Auditor should be looking into this.
Let me see if I can explain two of these issues very clearly.
1) The $2,400,000: Every year, the Town has a budget line for the medical expenses of its employees. That line is part of the General Fund. Medical claims are paid out of the Internal Service Fund that, for obvious reasons, is highly regulated and to which strict accounting rules apply. During the fiscal year, all payments are made to the providers of medical services out of the ISF and then the ISF is reimbursed for those payments by the monies in the GF. It is this payment due to the ISF from the GF that people are calling the "receivable." As you can see, this is nothing more than an accounting or bookkeeping entry. At the end of each fiscal year, there are always payments that have to be made that either weren’t billed or weren’t paid prior to the end of the fiscal year and this is "washed out" shortly after the beginning of the new fiscal year. That receivable is the $2,400,000. There is absolutely no "shortfall."
2) The BOE slush fund: The ISF was established in 1993 but Ray Jankowski put his foot down in 2001 when he began to see discrepancies about its handling by the BOE. Prior thereto, this is how its predecessor, the medical reserve account, worked. Or didn’t. Let’s say that the BOE budgeted the sum of $10,000,000 for receivables...any and all co-pays for employee medical insurance. And let’s say that it did this even though its history (in accounting parlance it’s "experience) suggested a different number, let’s say $11,000,000. Despite that experience, with full knowledge that it was grossly underestimating the revenue, the BOE apparently did this year after year, generating a surplus that was then transferred from this account to others. Remember that the Statutes, unlike the Town, allow the BOE to make these transfers from one account to another. Now please understand this next point. The so-called "Town-side" had no specific knowledge of the problem since the BOE was sending the allegedly proper amount – the $10,000,000 -- to Ray Jankowski for deposit into the ISF. Without access to the data such as the number of retirees in the school system, he could not know for sure that there was anything untoward happening.
In about 2000, former Town Auditor Derek DeLeo made a comment about the way that the BOE finances were being handled. I will follow up on this and post as soon as I can find them. [ed. note: see comment 3]
So the affect on the taxpayers is that we footed the bill for $1,000,000 more than we had to. This is truly voodoo accounting; it is unlawful to overtax the taxpayers and, in my opinion, that’s exactly what was being done for years by the BOE and it is exactly what Ray Jankowski alleges in his letter.
Who knew about this? BOE Finance Manager Tom Corbett surely had to know. Former Chair Wendy Faulenbach? JeanAnn? Time will tell.
Thursday, March 6, 2008
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11 comments:
"I am conducting an internal review." How comforting. Not.
She's going to share it with the BOE? How about sharing it with the taxpayers - you know...the ones who pay the salaries?!
Here's what Derek DeLeo said about the BOE Finance Department when he was the Town Auditor, as quoted by Lynda Wellman in the February 18, 2005 edition of the Spectrum:
"Mr. DeLeo has said the finance offices of the school system and town are understaffed and undertrained, especially with the new specialized governmental accounting requirements known as GASB 34."
So basically Jay , if I have this figured out correctly, there should be some sort of "track" or motions accounting [and I use that term loosely!]for the money that was transferred from the medical line to other accounts? The BOE or the Super can't move the money without saying anything could they? Could this have been done with other lines as well? Moving approved capital funding into other lines to supplement the budget? Would that appear in the BOE minutes as well or they only as good as the recording secretary?
Could the auditor explain where the surplus from last years budget went and why the BOE only returned about $315,000 out of 2 million?
Would that appear in the BOE minutes as well or they only as good as the recording secretary?
As a recording secretary for various boards and commissions I can assure you if the item is discussed at a meeting, it would make the minutes. If the item is not discussed there would not be any mention in the minutes.
Transfers happen every month in the school system.
They don't list the transfers individually in the minutes but they have a transfer list that is approved every month.
And board members hardly ever ask questions.
I'd like to see a list of all the money transferred over one year so we really know where the tax dollars go, (and where they did not go )
They transfer money ALL THE TIME.
So basically the motion goes to approve the transfer list and that is all that is recorded in the minutes? Doesn't sound transparent to me....
I too would like to see a apreadsheet of all the transfers done by the BOE in a FY.
Is that information FOIable Jay?
I'm sorry but "understaffed and undertrained" does not sound like a department being run by a $160 K Super and they still gave her a raise instead of hiring more staff.
Yes. Every single sheet of paper in the BOE Finance Department is FOIable but I guarantee that you'll have a very hard time getting to it.
To get to the real documents that you want to see, you'd have to be able to identify them in your request. You should be able to walk in and say, "I'd like to see your file that contains all purchase orders that have been signed in this fiscal year." You will be stonewalled. You will be told that such a file does not exist. And this may be so because the filing system isn't set up this way. So then you'll have to ask how it is set up and you might get an answer and you can then make a request for what you're seeking. Don't count on getting the "prompt" response that the law requires! omeone will run across the hall to ask the Super if it's OK and someone will tell you that time is needed to review the file to make sure that there's nothing in it that's exempt from the law. This is not the way it's supposed to work but that's the real-world liklihood of what will happen. People there are scared to death. Contrats this to walking into Ray Jankowski's office and asking the same thing. Not only will you get an immediate response but people will be helpful and they will help you find exactly what you're looking for even if you don't ask for the file using the name that they've put on it. Having nothing to hide makes a big difference!
Here's a transfer example from minutes posted on web from Dec 3 operations meeting
3.D. Monthly Reports
(2) Request for Transfers. Mr. McSherry questioned why transfers of insignificant amounts were required. Mr. Miller explained
this is to keep budgeted dollars and spent dollars in line. Mrs. Faulenbach asked about the air conditioning expenditures. Mr. Calhoun replied the air conditioning system at Hill and Plain required work. An HVAC individual has now been hired.
(3) Budget Position as of 11/30/07.
Mr. McSherry moved to bring the Monthly Reports to the full Board for approval. Motion seconded by Mr. Lawson and passed unanimously.
Then from the Dec. 11 school board minutes
Monthly reports
Ms. Thomas moved to approve the monthly budget reports: request for budget transfer, purchase
resolution D-605, and the budget position as of 11/30/07, seconded by Mr. Ruggerio.
Mr. Lawson asked how the numbers looked. Mr. Turk said the School Board has used 92% of budget which
is up from 88% one year ago however, the amount of $1,200,000 has been encumbered in an attempt to minimize year end surprises.
Motion made and approved on the monthly budget reports: request for budget transfer, purchase resolution D-605, and the budget position as of 11/30/07.
The motion was unanimously approved.
You have to go to the central office and ask for the transfer lists. They may make you fill out a writen request, but with any luck those transfer lists are filed with minutes as attachments - they should be.
But isn't this interesting in the minutes
"The amount of $1,200,000 has been encumbered in an attempt to minimize year end surprises."
Now what does that mean? more fancy book keeping?
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