BlumShapiro accountant Joseph Kask answers questions from commission member Ron Klattenburg at Wednesday's F&G meeting as City Finance Director Carl Erlacher looks on.
At Wednesday's monthy meeting of the Finance and Governance Operations Commission, representatives from the city's audit firm BlumShapiro answered questions about an audit currently underway at the Board of Education.
While the audit is an annual event at the BOE, auditors have been directed to examine areas of interest based on complaints made to city hall and to members of the Common Council.
"We would extend our regular procedures where there are concern that have been brought to our attention where there might be a problem," according to CPA Joseph Kask, Director of Governmental Services for BlumShapiro.
Among those problematic areas are two raised specifically by Commission members Wednesday evening. One is the movement of "surplus" dollars at the end of the school year to cover expenditures in the following year's budget.
Board of Education Surplus Reported
Commission member Phil Pessina reported that a letter he received from the Board of Education reported an $859,520 surplus at the BOE in the fiscal year that ended June 30, 2010.
Kask explained that the Board of Education is fully within their rights to encumber budget dollars for expenditures in the budget year in which they were appropriated, and that they could move money from budget line to budget line up until midnight of June 30. However, he noted that law does not allow the Board of Education to spend money for expenses in the following year's budget.
"There are boundaries which cannot be crossed," said Commission member Gerry Daley. "Like buying ahead for the next fiscal year."
Without pointing to specific practices at the Board of Education, Kask said it was legitimate for the city to question these kind of purchases, giving as an example, purchase of fuel oil for multiple years.
"Does a Board of Education have the authority to enter into multi-year contract without Council approval?" Kask asked rhetorically, and then added that he doubted any BOE had that kind of authority.
Commission member Hope Kasper also questioned a report she had received that there is a cash account at the BOE which holds a reported experience-rating rebate of between one and two million dollars from the Board of Education's health insurance company.
Kask said that the BOE is obligated to report all cash accounts to auditors.
Kask, and his associate, Nikoleta McTigue, who is actually managing the audit, noted that the audit was ongoing, and that they had no specific findings to report at the current date. They did say that any discrepancies would be reported to the city, to the State Board of Education and to the State Office of Policy and Management.
Kask did note that there was some concern about "liquidation of purchase orders" at fiscal year end, and while he pulled himself back from calling them "problems" he did note that "there are processes and procedures we need to discuss when it involves the purchase order process."
Parking Garage Construction Discussed
Parking Director Tom Hartley found his proposal to move the construction of a parking garage from its current proposed site at the arcade on Dingwall Drive to a space in the Melilli lot was not met with open arms by the F&G Commission.
Daley complained that the parking study, of which he was a participant, debated a proposal to build on the Melilli site. He said that it was preferred by a faction on the parking study, but that the majority preferred the arcade site.
"The reason the arcade was built there in the first place was because it was in the Center of Main Street," Daley said, noting that a garage there would serve anyone visiting Main Street.
"The thing that would sell me," Daley said. "Is if we had a use for the Arcade site.
Hartley said that he would make a presentation to the Economic Development Commission at its next meeting, and hoped to bring his proposal to the full Commission, as soon as possible, for their review and approval.
Money to Clear Coginchaug Stream Bed
F&G also approved the expenditure of $15,000 to hire an engineering firm to plan the clearing of the river channel below the collapsed slope at the Charton Apartments.
The Commission moved the expenditure to the Common Council for approval and noted that the resolution should seek to recover city dollars spent from the owners of the Charton Apartments.