WESTHAMPTON — An ongoing internal financial review of the Hampshire Regional School District budget has unraveled a slew of accounting errors in the district going back several years.
Superintendent Vito Perrone says the decision by the district’s member towns to fund the review work has paid off, as the examination helped the district recover some $1.4 million through state claims and reimbursements, along with accounting errors that amounted to a $1.3 million deficit.
Perrone organized an All Committees meeting on Jan. 5, welcoming members from the five school committees in the district, laying out the progress that has been made through the finance review, or “forensic” work.
The Gazette recently met with Perrone and Hampshire Regional School District Chair Thomas Cleary Jr. to discuss the central office team’s efforts over the last 18 months since Perrone took over as superintendent.
“Hampshire Regional and the district as a whole has had some challenges over the past several years in terms of receiving information and having administrative tasks completed,” Cleary explained.
In the interview, both Cleary and Perrone lauded the work of the central office team to unearth many of the accounting errors that were made several years ago. Cleary said that the Jan. 5 meeting was the first where the school committee members could see “the fruits of those labors.”
“I’m proud of the collaboration and the relationship that we have with the school committees,” Perrone said. “I’m really happy that we have begun to reestablish trust, that we’ve begun to really effectively communicate and collaborate with all stakeholders.”
Perrone, who is about halfway through his three-year contract, explained that the forensic work consisted of internal audits, looking at all the books, examining ledgers and finding accounting errors. Additionally, the work has involved patching holes that led to the breakdowns by increasing communication lines.
“My children went to school here. My kids went to the elementary school in Westhampton,” Perrone said. “I know this community, and I was under no illusions when I was hired about the challenges that we as a team were going to face.”
Perrone said the Jan. 5 meeting doubled as an informational session for the school committees and a central office budget outlook for this upcoming fiscal year, which begins July 1.
“We knew that there were issues, but we didn’t know there were so many different complicating factors and overlapping challenges that had been unearthed, that the books for several years, needed to be unwound,” Cleary explained about the forensic work.
Cleary said the forensic work that Perrone escalated last summer unearthed more than a $1.3 million in excess and deficiency accounts, which Cleary explained acts in a similar way to free cash for a town. But, he said it is very rare to have a deficiency in this account.
“I was not able to find any E and D (excess and deficiency) balances in the entire state that approached what our deficit is,” Cleary said.
On the positive side, Cleary explained that Director of Student Services Amy Drake also found more than $1.4 million accessible through reimbursements and claims from the state, that were not made by the previous administration. He says the forensic work, which cost about $256,000 this year, was well worth the pay off.
While the $1.4 million cannot be used to directly offset the $1.3 million deficit, Perrone explained it is a positive heading into the upcoming budget season.
“It’s really been a challenge in the last year and a half digging through forensically,” Perrone explained, saying that in the midst of that work, the district has also had to facilitate the current school year and begin projections for next fiscal year.
Perrone said what is really exciting, is that due to the progress that has been made, the $256,000 in forensic work this year is projected to be reduced to $77,670 for next year. He said the remaining funds are going to be used to look back at different grants.
Perrone explained that along with financial mismanagement, frequent staff turnover was another driving factor, with Perrone having to assemble a central office team when he began.
Perrone and Cleary explained that the Hampshire Regional School District is a unique district, given that there are five different towns and school districts wrapped into one.
Cleary explained that due to Massachusetts General Law and state regulations, through this unique system, it requires that the central office — which oversees operations in each district — set their budget first. Then, the Hampshire Regional High School and the Chesterfield-Goshen Regional school committees set their budget, followed by the remaining committees.
While no votes were made at the Jan. 5 meeting, the proposed central office budget for the next fiscal year amounts to roughly $1,822,000, a decrease by a little more than $110,000 compared to the current year’s budget of $1,933,000. That decrease mainly comes from the expenditures used for the forensic work.
That is part of the district’s overall budget, which amounts to $18.2 million for the current year.
Once the central office budget is approved, it will kick-start the regional district’s budgeting process followed by the single towns.
Overall, Perrone said he is proud of the work that’s been accomplished, but noted that there is still work to be done. He said his job is to listen to the 33 school committee members throughout the five districts, who act as his boss, while keeping his and the central office’s work transparent and thorough.
“We like to say ‘The Good, the Bad and the Ugly,'” Perrone explained. “We’re going to be transparent. You’re going to know about the good, the bad and the ugly.”