Curmudgeon's Corner: Wadovick examination was a colassal waste of time (OPINION)

April 25, 2012

Last December, North Kingstown Town Manager Mike Embury recommended that the town council engage the accounting firm of Nadeau Wadovick LLP to conduct a special examination of the school department finances.
A couple of hours before, I had met with Mr. Embury in my former capacity as the chairman of the town’s audit committee. The town manager stated the purpose of the audit was to determine the cost to the school department of the state’s Basic Education Plan.
Mr. Embury also told me “emergency nature of the situation” required the suspension of competitive bidding rules and precluded the involvement of the town audit committee which was due to meet a couple of days later.
Later that evening Mr. Embury told the town council that they were under a court order to conduct a special audit of the school department. Work had to start immediately, he said, because the report had to be presented to Superior Court by January 17th. The council voted unanimously to engage Nadeau Wadovick (no other firm was mentioned) at a cost of approximately $25,000.
I wrote about this situation in this column on February 9, 2012 (“How does Wadovick audit solve the problem?”).
On March 29, Superior Court Judge David Stern issued his decision in the town’s request for a preliminary injunction and writ of mandamus against the school committee, the school superintendent and director of administrative services. (A writ of mandamus is an extraordinary court order compelling an official to perform a certain duty.)
Three things are worth noting in the court’s decision. First, the plaintiffs –the parties filing the suit- are the town manager and finance director Patricia Sunderland. The town council was not a party to the action although it is hardly conceivable, that the suit was filed without the knowledge and assent of at least the president of the town council, Liz Dolan.
Next, the suit was filed on December 15, the very day that the town manager and council president were meeting with school superintendent Phil Auger and school committee chairperson Kim Page. At a school committee meeting a couple of days prior, Mrs. Page said that she would ask for a meeting with the municipal side to try to work out an amicable solution to the projected budget deficit.
In his decision, Judge Stern “appeals to the parties to work out their differences and find an amicable solution while there is still time.” He goes on, “This Court asks that the parties cross the divide and come together in the interest of the community that, by the inherent nature of their positions, they serve and lead.”
In my experience it is nearly impossible for parties to “cross the divide and come together” to “find an amicable solution” when one side is attempting to bargain in good faith while the other is filing a lawsuit.
Finally, the court’s decision neither mentions an accountant’s report nor does it reference a requirement for such a special audit.
The school department has published an “Annual Report to the Community”. The “Financial Summary” states that $53,744,366 of the requested budget for the next fiscal year is “non-discretionary”. That is, 91% of the budget is comprised of contractual obligations, regulatory requirements and mandated programs. The school committee and administration have some control over the remaining 9% including “non-RI Department of Education mandated programs.”
At the joint town council-school committee budget hearing last Monday, I inquired regarding the status of the Nadeau Wadovick report noting that it would be extremely useful to the elected officials and taxpayers alike to see whether the auditors agreed with the superintendent’s statement of the cost of the BEP.
At the prodding of council president Dolan, Embury stated that he had received the auditors’ report “that morning” and that it would be released “within a couple of days”.
Nadeau Wadovick’s report on their “Accelerated School Budget Examination and Basic Education Program Compliance Review” is dated February 13, 2012. Auditors’ reports and letters of transmittal are normally dated as of the conclusion of their field work. However, why it took nearly two months to issue their findings in this “urgent” matter is unclear.
Most of the 24-page report is a regurgitation of undisputed facts about the projected budget deficit for FY 2012 that were disclosed by the school district and a recitation of the arguments made by the former and present school superintendent and members of the school committee.
The December 19 Consent Order entered into between the town and school department states the purpose of the program and financial review of the school department was to identify “areas in which cost savings can be effected so as to avoid [a deficit] in fiscal year 2012.” Nevertheless, the auditor says the scope of their work “did not afford us ample time to conduct a thorough review of all expenditures accounts” because “detail account analysis is difficult and time consuming.”
Presumably due to these time constraints the auditor says the town officers and legal counsel agreed that the most effective approach would be “to assign …tasks to the central office administration.” This raises the question of why the services of an accounting firm were needed in the first place.
The report says RIDE has not published metrics with which to measure compliance with the 2009 BEP. Therefore, the auditors had “the Superintendent and his administrative team identify BEP regulations that, in their professional judgment, would be considered as non-compliant by RIDE…” In other words, the school department was asked to conjure up a list of imaginary violations of BEP performance measures that do not yet exist.
The report concludes, “the district offers academic programs that exceed BEP requirements”. However, the auditor does not quantify these programs which the town manager said was the whole purpose of the engagement.
The auditor cites a ruling in a Caruolo action filed by Cranston’s school committee in 2008 that “a municipality is only required to appropriate a sum sufficient for a school committee to comply with its minimum requirements under law, regulations and contract.” This goes to the heart of the matter. However, this ruling was made under the quantified BEP that existed prior to 2009.
The auditor states “We did not have the time and personnel available to examine…where expenditures may exceed the minimum amounts to comply with the BEP” which I thought was the whole point of the exercise.
After stating that RIDE has issued no metrics to measure a district’s BEP, the auditor recommends that the school committee “submit detailed budget requests…that will provide the Town Council with a clear understanding of what programs and funding are required to comply with the minimal requirements of the BEP as well as the funding required to offer those programs that exceed BEP regulations.”
The special examination by Nadeau Wadovick LLP has been a colossal waste of money and school district administration time and effort. This time and effort could have been better spent on finding ways to ameliorate the projected deficit.
North Kingstown taxpayers are entitled to know what the lawsuit and special examination cost the town and school department.

Richard August is a North Kingstown resident and a regular contributor to the Standard Times. His opinions are his own.