NORWALK, Conn. – A $1 million deficit in the 2011 Norwalk Board of Education special education fund caused Common Council members to express shock Thursday evening.
The $1,051,210 figure in fiscal year 2010-2011 was revealed during a council finance committee discussion of the BlumShapiro operational review of the BOE special education fund from 2009 to 2012. It was part two of the presentation of the review; the first part was at last month’s committee meeting.
Dominic Barone and Jeffrey Ziplow of BlumShapiro had more statistics. In FY2008-2009, there was a $452,587 deficit. In FY2009-2010, there was a $683,319 deficit.
Yet none of this got any attention. The BOE reconciled its budget without asking the city for money, apparently by transferring money from other accounts, Norwalk Public Schools Chief Operating Officer Elio Longo said.
Longo, who was hired in late 2011, said that, prior to 2012, the board of education was solely focused on the bottom line. Transfers from one account to another were made at the end of the year to reconcile the total figure.
“If the bottom line balances but two of a hundred line items when combined total a $1 million deficit, the board of education must have identified an offset of $1 million during the year,” he said. “My research shows that there were years the special education was coupled with the shortfall in insurance. There were years where the line item appropriation on the board of education side, account 212, the insurance fund, was not per se delivered to the city side, dollar for dollar.”
Councilmen Nick Kydes (R-District C) and Matt Miklave (D-District A) voiced the strongest opinions on that.
“If the CFO of a publicly traded company intentionally misstated the books, someone is going to prison,” Miklave said. “If there is a suggestion, as I think I have heard, there was a deliberate decision made not to transfer sufficient funds to the city’s insurance fund to cover the expenses in order to make the books balance, that is a shocking disclosure. I’m outraged.”
Kydes gave Longo a new moniker as he expressed his feelings.
“I’m very disappointed,” he said. “I’m very disturbed by some of the things I’m hearing at this board tonight. A new sheriff is in town; he’s cleaning up.”
Pauline Smith, director of pupil personnel-special education for three years, said she was aware her department was dipping into the red, but that it wasn’t her responsibility to figure out how to deal with it.
“What their plan was to fix that situation, reconcile it at the end, that wasn’t something that is shared with me in my office,” she said. “We just keep them apprised. … I don’t know what the planning process was down in the superintendent’s office or the financial office because that’s not something that typically I was involved in.”
That drew a strong rebuke from Kydes.
“Where is the accountability?” he asked. “If you’re the director of a department, you’re responsible. You’re responsible for your budget. So I don’t think I want to hear an excuse, ‘I’m not part of that process.’”
He went further.
“We need to understand who is accountable for the past lack of financial controls in the board of education finance system,” he said. “I would hate to find out there were two separate books that you’re keeping, or that were kept.”
Committee members quizzed the two people present who would have knowledge of past practices – Interim Superintendent Tony Daddona and Kimmel, who served on the BOE from 2005 to 2009 – if transfers had been made from one BOE account to another without board approval.
“At one time in the history of this, transfers did not go to the board,” Daddona said. “In 2009, I think, transfers went to the board.”
Kimmel said that, in September 2009, the BOE was surprised with a stack of requests for transfers, all relatively small. They were told it was because budgeting was done in advance and that it was impossible to predict exact amounts that would be needed.
“There was an assumption, and it may not have been a correct assumption, that these were all of the transfers that were being made,” he said. “I’m not 100 percent sure at this point that that was the case. We were approving lots of transfers. I do not remember all that many that were insurance accounts. They were generally small things.”
Councilman Doug Hempstead (R-At Large) said that, on the city side, there is a laborious process of running budget adjustments through the Board of Estimate and Taxation and to the council for a vote.
The BOE policy “blows my mind,” he said.
The meeting ended with a positive note – Kimmel handed Longo a handmade sheriff’s badge, drawn on a sheet of paper.
Committee Chairman Carvin Hilliard (D-District B) thanked the BOE personnel for coming to the meeting.
“Best I’ve seen the Board of Education and the city get along and cooperate with each other in my 10 years on the council,” he said. “I hope it continues.”