Learning hard lessons from the Manatee County school district budget disaster

February 24, 2013 

A quick review of Navigant's explanation of its forensic audit of the Manatee County school district's financial disaster leads to this conclusion: One terrible decision after another led to the $3.4 million budget deficit.

Like dominoes lined up in a row for a chain reaction collapse, the first district domino to fall appears to be the dismantling of an effective software budgeting tool in favor of a faulty one which then brought on the conversion to a manual accounting system -- this for a giant organization with 5,500 employees. Human failings compounded the systemic ones with calculation errors, overlooked expenses and communication breakdowns.

"It was like a perfect storm," Navigant director Al Robinson remarked during Thursday evening's discussion of the consulting company's forensic audit in front of the school board, audit committee and the public. "It was a matter of flawed methods, failed systems and calculation errors," Robinson added.

Textbook expenses, salaries for new teachers, a retroactive pay cut that was rescinded, unbudgeted and underfunded programs, fund transfers from reserves to the general fund all led to the budget shortfall -- and financial staff warnings to top administrators went unheeded.

Overworked staff juggling too many tasks made mistakes, and some were then inexperienced in school finance. The lack of management oversight is particularly galling.

Top administrators, including former Superintendent Tim McGonegal, remained oblivious to the deficit until it became time to start closing the books on fiscal year 2011-2012 last summer. Even then, administrators remained in denial about $8 million in overspending. The resulting $3.4 million deficit became apparent in late August, though nobody could explain how this occurred. Several weeks later, McGonegal disclosed the shortfall to the school board and abruptly resigned.

The only good news here is forensic auditors did not find evidence of criminal acts or misappropriations.

It's time to close the books on this dreadful chapter in the district's history, learn the hard lessons and move forward with solutions that will prevent another meltdown. Administrators are beginning to institute changes in the budget process. One of Navigant's recommendations is the budget be monitored throughout the year, a vital change to avert "perfect storm."

Communications must be improved, too, with open lines between administrators, teachers and the school board. While we appreciate the chain of command, whistleblowers should not fear for their jobs for disclosing issues to board members.

Linda Schaich, a candidate for school board last year, pointed out a district rule that only allows staff to communicate to the board only through the superintendent. In the past, board members were not brought into the loop and made decisions based on limited information. We agree with Schaich's recommendation for a policy change.

In selecting Rick Mills as the next superintendent, the board found someone with deep experience in restructuring an organization. In an interview with Herald education reporter Erica Earl after his appointment last week, Mills, the current chief executive of the Minneapolis Public School District, stated: "I want to look at what was successful for the CFO, re-examine the audit and fiscal tools, and put structure in place after comparing Minneapolis to here."

In anticipation of the complete restoration of sound financial management, we look forward to a razor-sharp focus on improvements in the education of our children.

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