T/E Finance Committee Meeting w/no decision on tax increase – School Board Meeting Tonight at 7:30 PM, Conestoga High School … A School Board Divided

Unfortunately for T/E taxpayers, the District’s Finance Committee meetings are not videotaped. With the open budget issues, looming June 10th deadline, in addition to unresolved $1.2 million accounting errors related to Special Ed expenses, the public really needs to know what’s going on in the process – especially in advance of the important School Board meeting tonight!

I was unable to attend the Finance Committee meeting and will miss the School Board meeting tonight as it conflicts with the special Tredyffrin Township Zoning Hearing Board.  At 7 PM at the township building, Catalyst Outdoor Advertising will present its appeal on the township’s denial of their application for the digital billboard in Paoli.  My BAN the Digital Billboard campaign has been 9 months in the making so need to attend the ZHB meeting.  However, also important is the School Board meeting tonight (7:30 PM, Conestoga High School) – the proposed tax increase, the accounting errors and how the business manager (Art McDonnell) factors into the situation.

After speaking with several residents in attendance at the Finance Committee meeting, an update would be useful. (Remember, the meetings are not videotaped and I was unable to attend). Resident Doug Anestad did attend the Finance Committee meeting and offers his personal commentary below.

Reading Doug’s remarks, it sure sounds like the Finance Committee and its Chair Todd Kantorcyzk are a ‘school board divided’. And just when you thought ALL the numbers are in for the proposed budget, the administration announces that “ … special education expenses were going to be an additional $700k this year with $500k of that as a recurring expense” as reported by Doug.  My question is WHY is this information coming in at the eleventh hour of the budget process!

Last night’s Finance Committee meeting was a late one ending after 10:30 pm.

At the beginning of the meeting, an undated letter from the auditor was distributed to the audience. The Business Manager, Art McDonnell, stated that he asked the auditor after the last finance meeting to make the letter after the community questioned the $1.2M in special education spending that was incorrectly applied to the wrong school year and in order to respond to the complaint directed to the Pennsylvania Department of Education.

Neal Colligan pointed out that the letter clearly stated “Management made all decisions regarding how and when these transactions were recorded.” I pointed out that the email chain for the document clearly stated that it was sent on May 10 – three days before the last finance meeting, not after it as stated by Art. The letter also mentions the question of the $1.2M being raised in April 2019. Was that when the auditors were first made aware of the misstated $1.2M? We still don’t know the answer to this or other questions because the auditor did not show up to yet another meeting even though school board members have requested that they show up repeatedly for quite some time. It seems that Art does not feel the board members are entitled to talk to their auditor.

The administration then did their presentation on the current status of the budget process. This is when the Director of Individualized Student Services, Chris Groppe, stated that special education expenses were going to be an additional $700k this year with $500k of that as a recurring expense. As this is a recurring expense, the administration then suggested that the $500k be added to next years budget.

This was followed by a long conversation on where the board members stood in regards to the budget. The school board members then went around and stated where they were in terms of tax increases. Even though the Finance Chair, Todd Kantorczyk, wanted to have the school board members express what they were comfortable with in regards to a projected deficit, most of the board members seemed to want to express where they were in regards to a percentage tax increase.

Here is a summary of where the board members were:

2.8% – Kate Murphy, Edward Sweeney

3.91% – Heather Ward, Michele Burger, Tina Whitlow, Scott Dorsey

4.33% – Roberta Hotinski, Kyle Boyer, Todd Kantorczyk

Kyle Boyer stated he was willing to go down to 3.91% and offered to do so in order to have five votes for the 3.91% to move the process along. Todd Kantorczyk did not take him up on his offer so all three options will be presented at the board meeting tonight.

Many of the school board members showed their displeasure with administration during their comments. Words like frustrated, distressed, pissed off, and trust were used by board members. They really did not like $700k in expenses being added to this year with $500k of that as recurring expenses for next year being dropped on top of them at the last minute.

It would appear that many of the school board members are starting to see the manipulation the administration uses with the school board and don’t like what they are seeing.

The committee then approved the following strategies for deficit reduction. Reducing the budgeted amount for the school safety coordinator position between $50k to $70k. Remove the elementary mental health specialist for $96,000. Delay new reading program $300,000.

The meeting ended with one last appeal for the school board by former Tredyffrin Township Supervisor Mike Heaberg. Mike made the case that by not fixing the incorrect financial numbers, the district might lose some of the trust of the community and that the school board should do so at the meeting tonight.

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16 Comments

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  1. Thank you Pattye and Doug for the valuable update for those of us not able to be there last night (or tonight).

    I am pleased that the majority of the Board is definitively backing off the manufactured 6% tax increase. However there seems to be no sign that they are addressing the underlying procedural and governance causes of the mistake and cover up, which are so vital to restoring confidence going forward.

    So now there is yet another Special Education surprise. I believe very strongly that the Board should take the $50,000 being requested at today’s Board meeting for a “strategic planning consultant” and commission an INDEPENDENT analysis of this expenditure category. What are the REAL trends in and projections for the users, quantity, intensity, suppliers and prices of these services? What options exist? How can this category be managed without perpetual tax increases and crowding out other programs?

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    Pattye Reply:

    Absolute agree Ray re the underlying accounting mistake — regardless of what the tax increase (and of course we want it lower!) this not address the “elephant in the room”! Isn’t the community entitled to know where they “get” their final tax increase number? Where is the accountability? How are we supposed to “trust” the accuracy of anything about this budget process? Between the Budget Workshops, the Finance Committee meetings, the regular School Board meetings — we’re at the end of May and the Board is still talking about what to cut in the budget?

    Without the requirement for Art McDonnell to FIX the Special Ed mistake — does the school board not realize that it will impact their ability to tax in the 2020-21 budget year? Again, you don’t need an MBA in Accounting or a CPA license to see this problem and the “kick the can” is not going to improve the situation!!

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  2. The big news from last night is the 5/10/19 letter from Edward J. Furman, CPA of Maillie, the District’s auditor.

    Regarding the handling of the special ed expenditures, the Business Manager claimed a couple of months ago that in November of ’17 the auditors were asked and approved of the District booking fiscal ’17 expenses in fiscal ’18. That is his defense of his wrong decision which is contrary to the PA mandated accounting treatment which requires expenses to be booked in the year they are incurred. He has provided no evidence of the auditors approval – nothing in the audit, the management letter, schedules, …

    The final “nail in the coffin” is the Mr. Furman’s letter which clearly states, “In April 2019, the question was raised as to the accounting of special expenditures related to fiscal year 2017 recorded in fiscal year 2018.” The auditor was asked in April 2019, NOT November 2017. The letter further states, “Management made all decisions regarding how and when these transactions were recorded.” Management = Art McDonnell

    The expenses were booked incorrectly, Mr. McDonnell owns that decision and the subsequent coverup. The Board should direct the Superintendent to correct the filings and Special Education exception.

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  3. The school administration needs to be held accountable. They seem to constantly be paying fast and loose with the district’s finances, and taxpayers. Once more I would like to have independent audit of the entire year’s financials by an auditor chosen and working for the Board, not the district per se. Also,it’s frequently been a deficit claim needing tax increases in the past, only to find an excess in funds at the end of the fiscal year. The district administrators need to get their act together, or should be replaced.

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    Doug Anestad Reply:

    I agree. The Business Manager, Art McDonnell, has lied to board on multiple occasions throughout this whole mess. Yet the board still goes to them to get answers instead of seeking outside advice.

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  4. Agree with your sentiments “long time”…but, remember, the current auditor DOES report to the Board. What seemed odd when we were give their letter (referenced above) last night: it was addressed to the Business Manager and undated. The letter said what we would expect: the auditor had NO role in booking the Spec Ed expenses in the wrong period. The was “Management’s Division” alone. Who is “Management” seems to be an open question. The Auditor again told the Board they had no decision making authority. Where’s the audit committee, who is interfacing with this key accounting partner that the District pays for…?

    Similarly, it was Management’s Decision to submit Annual Financial Reports to the State with this timing error. THAT decision changed the District’s Taxing Authority (possibly in violation of Act 1) for last year, this year and (if uncorrected) next year. Who is in charge here? And shame on “Management” and the Board Members who tried to explain this away by laying it at the feet of the Auditors. Maillie said just what we would expect them to say: Management made all the significant financial decisions here. This should erode our Trust in “Management” and point to a need for a formal overhaul of lines of responsibility.

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    Keith Knauss Reply:

    Just to amplify and clarify Neal’s point about the board’s interaction with the auditor [or lack thereof].

    The auditor is the independent judge of the district’s financial affairs, and the business manager’s financial conduct as well as the superintendent and related employees. It’s the only “check” the board has. The communications should be directly between the board and the auditor without Mr. McDonnell as the intermediary. Otherwise the fox is guarding the hen house.

    Art shouldn’t be asking the auditor to write a letter about the late CCIU invoices; the board should. The letter shouldn’t be addressed to Art. It should be addressed to the board.

    The board shouldn’t be asking Art to contact the auditor about coming to a board meeting; the board should call the auditor directly and demand he attends.

    No one on the board should be afraid to call the auditor to ask questions. He works for the board. His name is Edward Furman and he can be reached at efurman@maillie.com or 610-935-1420.

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  5. Kate Murphy has really found her voice: thoughtful and well spoken. She also advocated for a well thought-out position regarding the delay in buying the new reading program after having done her homework on this important issue. She is developing into a real leader if the Board will allow that.

    Ed Sweeney has been a stable voice on these Budget issues….asking for months for an over-haul of the entire system. Other Board members are coming to this position particularly after the late-in-the-process Spec Ed expense changes dropped on them by the Admin Tuesday night. He’s been “right” for a long time.

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    Doug Anestad Reply:

    Completely agree with Kate Murphy and Ed Sweeney. I would also like to mention Heather Ward and to a slightly lesser degree Michele Burger and Tina Whitlow. Heather seems to demonstrate both the ability to see through the BS from the administration and is willingness to speak up about it publicly.

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  6. An auditor, by definition, should 1) officially inspect of an individual’s or organization’s accounts, typically an independent body; 2) conduct an official financial examination of (an individual’s or organization’s accounts). This means to evaluate and judge, not simply report what is told to him by the school authorities. That would be bookkeeper. So what is he hiding? Why does he continue to go through school administrators instead of reporting discrepancies directly to the Board? Isn’t that his job, his actual responsibility? The Board is being deficient by not contacting him directly and insisting he attend meetings with the Board to address the issues directly. Why the hesitation? In neglecting to follow through, members of the Board are being negligent to the taxpayers. Full Stop. Why? Are they lazy? Are they hesitant to challenge the administrators? Are the majority somehow trying to provide cover and be complicit so that taxes can be raised more and more every year? Are they simply wanting to avoid a public display of open controversy, knowing that the majority of the voters will not be informed sufficiently to care? And so just wait until the issue “burns” itself out?

    It increasingly sounds that the majority of the Board and the Administration don’t want to actually solve the discrepancy, hence avoiding any blame or actual responsibility. Pay the bills. Raise taxes so there’s more than ample funds to pay all that comes due year after year. Minimal questioning of the administrators actual controls, tardiness in planning, openness.

    This is not so complicated an issue to require so prolonged discussion. It should take only a meeting or two plus some reviews to sort out, fix the errors, put in place added overview to make sure it does not happen again. Plan to replace any and all parties that do not willingly and completely participate.

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    Doug Anestad Reply:

    You bring up some very good points. Why doesn’t the school board reach out to the auditors to speak to them directly? Instead the school board keeps going through an administrator who has hid information from them on the very topic they are asking about and then repeatedly lied about it.

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  7. I have attended 20 years worth of Budget meetings and have NEVER seen this district not have a definite tax rate this close to the end. There are no more finance meetings ..just the final board meeting on June 10th . So will our taxes be 2.8 3.91 or 4.3 ?
    Grateful to Ed Sweeney for starting his OPEN CONVERSATION on the delayed check situation. Kate Murphy for stating that it prolonged the budget process. The board passing a regulation in case it happens again doesn’t fix the current situation. Lastly to Doug Anestad for stating all the facts and not backing down.
    Please solve this problem before you set the tax rate .
    Thank you.

    [Reply]

    Pattye Reply:

    I know right?? What are they going to do, take the three numbers 2.8, 3.91 and 4.3 and pick the tax increase number out of a hat? Seriously, what are these numbers based on? They need to demand that the administration correct the accounting mistake and then present the accurate tax increase to the public! What does this need to be so hard and take so much time? Just do what’s right!

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    Doug Anestad Reply:

    I am grateful to Ed Sweeney and Kate Murphy as well. When will the school board start a real investigation into what happened? When will they either demand that the auditor be brought before them or speak to the auditor directly? We still don’t know if Art McDonnell lied about letting the auditor know about the $1.2M

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  8. I’m not sure anyone summarized the very fruitful discussion started by Ed Sweeney. (1:46 of the meting video) The Board finally directed the administration to provide to the Board the process for changing the AFRs, the cost of doing so, the legal implications and the secondary effects such as:
    – do the audits have the be changed?
    – will PDE change the 2019-20 special ed exception or will it stay the same?

    This should have been done months ago, but better late than never. My big hope is that the answers are not provided by Art and he is specifically excluded from the process of seeking answers. If he is part of the process I hope the board will seek written documentation from the sources queried (Solicitor, PDE, Maillie) rather than relying on the interpretation of an intermediary (Art).

    An aside – Todd chastised the board for bringing the matter up again because in his mind all the question have already been answered – which of course is false.

    [Reply]

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