More oversight seen needed in district’s finances

NASHUA – Somewhere along the line, Board of Education members stopped receiving monthly statements that one veteran member said allowed for the board to keep abreast of district finances.

Jack Kelley said when he first was elected to the board in 2004, members would receive financial statements every month, which were reviewed and approved by the support services committee.

At some point, those stopped coming, he said.

“What we have to do is go back to what it was like five or six years ago and see those monthly reports,” Kelley said.

As city and school officials try to figure out how the school district spent $3.36 million it didn’t have in last year’s school district budget, school board members did some introspection into their financial oversight Thursday night.

The general consensus was the board must do more to make sure what happened last year doesn’t repeat itself.

Board member Robert Hallowell said the right balance must be struck in its duty to oversee district finances.

“We came in from a board that was doing a lot of micromanaging, and we clearly went the other way,” Hallowell said. “I think we see the problems with both ends of that.”

President Tom Vaughan, a member of the board since 2006, could think of only one time when the board approved a financial report at a meeting.

Given everything that the board spends its time working on and the fact that those reports can be difficult to interpret, “I think that’s just something we fell into,” Vaughan said.

But Vaughan and other board members said all of that needs to change. Vaughan said he wants to see those reports reinstituted, perhaps even every other week.

“Once you start looking at these reports, you start to develop the right questions to ask,” he said.

In addition to last year’s deficit, the school district is projecting a $2 million deficit in this year’s budget.

Incoming Superintendent Mark Conrad, whose primary experience is in running school district finances, is continuing to put together a list of positions that will need to remain vacant for the upcoming school year to make up some of the projected deficit.

“It’s important to note we’re not eliminating any positions, we’re just looking at positions we can leave vacant,” he said.

That list of positions will be presented to principals at a meeting next week and to the Board of Education on Wednesday evening. Conrad said freezing positions would only make up some of the difference.

Still unclear is what exactly caused the deficit in last year’s budget, as well as this year’s.

Jim Mealey, the district’s former head of finances, told city and school officials earlier this week that he likely didn’t see the deficit coming because he was using faulty financial reports produced by the city.

It didn’t cause the deficit, he said, but made it difficult to foresee.

No formal decisions were made at Thursday night’s meeting. Board members spent much of the time brainstorming and throwing out ideas that could lead to more financial accountability.

Hallowell said the board should consider dropping its program-based budgeting format, which was implemented three years ago.

Though it might have led to more community involvement in the development of the budget, Hallowell said the other end of that might have been the board not getting in depth into each program.

But Hallowell said dropping the new budgeting format isn’t going to solve all of the district’s problems.

“The cause of this is not going to be one single thing,” he said. “It’s going to be a myriad of things.”

Board member Sandra Ziehm agreed that board members must take it upon themselves to better inform themselves about the budget.

Ziehm said she often inquires about finances, “but when you get an answer you have to take that answer at face value and assume that it’s correct.”

Conrad, who is splitting time between Bedford and Nashua before taking over full time at the end of August, said monthly financial reports are routine practice in most school districts and were used during his tenure in Nashua.

He said he would encourage more involvement from the board in district finances.

“I don’t view it as micromanagement for the board to receive a monthly report,” Conrad said.

Conrad is also putting together a committee that will review the district’s financial processes and look at ways to improve the way things are being run.

The district must “begin the process of restoring faith in our ability of managing our dollars,” Conrad said.

Conrad came to Thursday night’s meeting with a list of questions that need to be answered to determine how the district was able to fall into a multimillion-dollar deficit.

Some of those questions include looking at how severance is budgeted and whether the school district adequately budgeted for the change in the new teachers contract.

Much of the overages from last year occurred in the areas of severance and salaries. Special education, especially out of district placements, also went well over budget.

Hallowell suggested the district look at federal stimulus that could be used to offset some of those costs.

Conrad said that while much of special education costs are mandated, there are some discretionary areas that need to be reviewed.

Board members said part of the discussion in the next week or two will be whether the city should look to the school capital reserve fund to offset last year’s deficit.

Conrad said using the capital reserve fund might be the only way to fix the problem with exceeding the spending cap or impacting the tax rate. Accessing the money would require aldermanic approval.

Michael Brindley can be reached at 594-6426 or mbrindley@nashua