CPS Interim Performance Audit Report
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INTERIM REPORT PERFORMANCE AUDIT CRANSTON SCHOOL DISTRICT BY THE JOINT PERFORMANCE AUDIT TEAM Thomas Sweeney – School Representative Walter Edge, CPA – School Representative Salvatore Augeri – City Representative Jeffrey D. Wadovick, CPA – City Representative Steven Woerner, CPA – City Council Representative February 5, 2009 Interim Report Performance Audit Cranston Public School District Purpose of Interim Report The Joint Performance Audit Team (Team) made up of two representatives selected by the City of Cranston, two representatives selected by the Cranston School Committee and one representative selected by the City Council was engaged to complete a Performance Audit of the Cranston Public School District (District) in accordance with Generally Accepted Governmental Auditing Standards (GAGAS) (found in the “Yellow Book”). Both the City and the School Committee selected one Educational Expert and one Certified Public Accountant (CPA), expert in school finances. The Council’s representative is also a CPA. The Audit Team has completed a significant portion of the Performance Audit. The Team realized however, in December 2008, that if the Performance Audit was completed in February 2009 and the final Performance Audit Report (Report) issued in March 2009, the Report would be too late to assist the Cranston School Committee in the preparation of its fiscal ...
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INTERIM REPORT
PERFORMANCE AUDIT
CRANSTON SCHOOL DISTRICT
BY
THE JOINT PERFORMANCE AUDIT TEAM
Thomas Sweeney – School Representative
Walter Edge, CPA – School Representative
Salvatore Augeri – City Representative
Jeffrey D. Wadovick, CPA – City Representative
Steven Woerner, CPA – City Council Representative
February 5, 2009
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Interim Report
Performance Audit
Cranston Public School District
Purpose of Interim Report
The Joint Performance Audit Team (Team) made up of two representatives selected by
the City of Cranston, two representatives selected by the Cranston School Committee and
one representative selected by the City Council was engaged to complete a Performance
Audit of the Cranston Public School District (District) in accordance with Generally
Accepted Governmental Auditing Standards (GAGAS) (found in the “Yellow Book”).
Both the City and the School Committee selected one Educational Expert and one
Certified Public Accountant (CPA), expert in school finances.
The Council’s
representative is also a CPA.
The Audit Team has completed a significant portion of the Performance Audit. The Team
realized however, in December 2008, that if the Performance Audit was completed in
February 2009 and the final Performance Audit Report (Report) issued in March 2009,
the Report would be too late to assist the Cranston School Committee in the preparation
of its fiscal year ended June 30, 2010 budget.
It is a major concern of the Team that another year would pass without providing the
financial guidance that would be available in the final Report.
The Team therefore
agreed that an Interim Report dealing with financial issues only should be prepared to
provide the School Committee guidance for fiscal year ended 2010.
Scope of this Interim Report
This report deals with those financial issues that will require action by the School
Committee in advance of the start of fiscal year June 30, 2010 (July 1, 2009).
Further,
the
individual recommendations in this Report
are in compliance with current Law,
Regulation and Contract.
The Team is aware of numerous actions around the State of Rhode Island which may
change Law and Regulation and in some cases break contracts.
The Team felt that this
Interim Report should address adjustments that are presently
within the control of the
School Committee without breaking Law, Regulation or Contract.
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School Committee Budgeting Actions taken for the fiscal year ended June 30, 2009
Budget
The Team would be remiss if it were not to point out some of the Salary and Employee
Benefit budget cuts the School Committee made in balancing its June 30, 2009 budget.
It would be difficult in this Interim Report to provide a detail list of all the adjustments
but a few of the adjustments (budget cuts) are noteworthy as follows:
Savings
1 Eliminated Elementary Library Secretaries
$
54,577
2 Eliminated the School Committee Secretary (1/2 Year)
25,658
3 Did Not Replace Assistant Principal – East
95,506
4 Did Not Replace Secretary – East
54,495
5 Did Not Replace Assistant Principal – CACTC
79,912
6 Eliminated Secretary – CACTC (1/2 year)
29,139
Total $339,287
Performance Audit Findings
The following Audit findings are in no particular order but rather are listed as they were
reported by the Team.
Most of these adjustments will require School Committee action
such as sending out lay-off notices.
The Team suggests the School Committee proceeds
on the side of caution and sends out additional layoff notices rather than less should the
Team find additional salary reductions while completing its fieldwork for the
Performance Audit.
In order to determine the cost savings of these findings, the Team noted that the
individual currently in the position may not be the individual eventually terminated.
Therefore, the Team calculated a salary and employee benefit amount that would
represent a more likely savings from the elimination of the position.
The Team has
calculated the expected savings on average will be the cost of a 4
th
step teacher with
advanced degrees (approximately $49,000) plus employee benefits of 25% for a total
savings of approximately $61,250.
The team noted the savings could be even greater if
the individual currently in the positions retired.
It is important to note, at this time, the Team is aware the spending of the Cranston
School District’s budget falls solely within the purview of the School Committee.
The
following findings are provided to the School Committee to show certain areas within the
education program where the Team has found discretionary funds (funds budgeted, but
not required by law, regulation and/or contract).
These funds can be recaptured by the
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School Committee and reallocated to more important needs of the District and/or reduce
the bottom line of the budget.
Some of these recommendations may be limited by contract language but in these hard
economic times Unions and School Committees must work together to get a balanced
budget with the least pain to all.
These recommendations serve this purpose.
1.
Elementary School Guidance Counselors
:
The District is not required to provide
Elementary School Guidance Counselors
under the Basic Education Regulations.
The Team believes part of the problem is
the inclusion of guidance counselors in student’s Individual Education Plans
(IEP).
The Team recommends the School Committee, as soon as possible, implement a
policy decision to eliminate the reference to a guidance counselor in a student’s
IEP which should significantly reduce the need for these counselors.
The Team
believes that the District can reduce
4.4 counselors in the first year (FYE June 30,
2010) at a savings of approximately
$269,500
.
2.
String and Band Music Program:
The String and Band Music Programs are not required by law, regulation or
contract and if eliminated the District could save 5 full time string and band
teachers at a savings of approximately
$306,360
.
The Team also noted several
other music teachers at the Cranston Public Schools teach general music and
string.
No adjustment was made for these dual music teachers but a more detailed
review of these teachers schedules may result in additional savings.
3.
The Enrichment Program In Cranston (EPIC):
The Enrichment Program In Cranston (EPIC) is provided to “gifted” students.
The Team recommends the EPIC be eliminated since it is not required by law,
contract or regulation.
This action would result in a savings of salary and
employee benefits of 5 teachers (referred to as “consultants” in the budget).
The
total savings would be approximately
$306,360
.
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4.
Middle School Sports:
Given all of the extra sports
activities available to middle school students by the
community the need for middle school sports is highly questionable.
Further,
more middle school sports are not required by law, contract or regulation.
The
elimination of middle school sports would save
$123,470
.
5.
High School and Middle School Extra Curricular Activities:
During the current economic hard times it is necessary to reduce spending on
some of the additional add-on student activities that have been provided to
students in the past.
However, the elimination of extra curricular activities
reduces the overall environment of the school.
The Team has reviewed the extra curricular activities at both the High Schools
and the Middle Schools and find that it is not in the best position to decide which
of the extra curricular activities should be discontinued and which should be
retained.
The fact that the District spends in excess of $200,000 on these extra
curricular activities, which by their own name states that they are “extra”, is
unreasonable in these economic times.
The School Committee should review
these activities with the assistance of administrative staff and make a strong effort
to save about half of the funds allocated to these activities or approximately
$100,000
.
The Team is aware extra curricular activities, like some of the sports activities,
are of special interest to some groups of parents.
The Team would consider the
raising of $100,000 by these special interest groups and parents, to supplement the
School budget for extra curricular activities an acceptable solution to the
overspending in this area.
6.
High School Sports:
This is a very sensitive area for the School Committee and many parents.
The
Team believes sport programs (like extracurricular activities) help round out a
student’s education and develop community spirit and pride.
Eliminating High
School sports is always considered when school funds are limited.
The Team
does not believe that High School sports should be eliminated.
However, after reviewing the sports programs offered by the Cranston Public
Schools, the Team recommends the District take a hard look at individual high
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school sports to determine how the District can save 25% of the High School
Sports budget.
Boys: baseball, basketball, football, hockey, track, indoor track, volleyball,
wrestling, soccer, swimming and tennis
Girls: field hockey, softball, fast pitch, swim, tennis, track, indoor track, soccer,
volleyball, and lacrosse
Coed: golf, hockey
A 25% savings in the High School sports budget would equal approximately
$130,000
which would leave the High School annual sports budget at nearly
$400,000.
The Team believes a quality High School sports program could be
offered with a budget of that size.
The Team believes a 25% cut in the High School sports budget can be realized a
number of different ways.
For example, all sports could be cut 25% or certain
sports, without significant participation, could be eliminated.
Furthermore, some
sports teams could be consolidated and made coed, or revenues could be raised by
booster clubs to help supplement funding the sport.
7.
Certified Nurse Teachers:
The Team is making no recommendation at this time regarding the school nurses
but the Team is aware that consideration is being given to eliminating the teacher
certificate currently required for school nurses.
Eliminating this requirement will
result in future saving.
An estimate cost saving could not be determined at this
time.
8.
Special Education:
The Team has reviewed the Special Education accounts and found a
reorganization of the Special Education Department is necessary.
The Team
recommends a reorganization of the Special Education Department begin
immediately with a change of individual title and responsibilities.
The Title of
Executive Director of Pupil Personnel and Services should be changed to Director
of Special Education and the responsibilities of that position should be revised to
reflect the title.
This step alone will put special education programs under the
leadership of one administrator and will reduce duplication of efforts.
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The Team first identified the District level of staffing was excessive.
The staffing
at the District level should be reduced to one Director and two Assistant
Directors.
This reorganization at the District level would result in approximately
$250,000
of savings.
The next level of Special Education costs is at the Assistant Principal’s level at
the High Schools.
Because the District has already made cuts at the Assistant
Principal’s level it would not be prudent at this time to
make further cuts.
However, the Team recommends the Special Education cost at this level be
reviewed in six months to see if further reductions can be made.
The third level of Special Education costs relates to the Descriptive Prescriptive
(DP) teachers and Social Workers.
The Team noted the use of DP
Teachers is
not needed under the required Individual with Disability Education Act (IDEA)
response to intervention procedures; therefore, 2 DP teachers can be reduced in
the 2010 budget.
There are other positions which are listed as part-time DP
teachers which should be reviewed for reduction and/or a consolidation of
resource teachers.
The number of Special Education Social Workers (16.6 FTE) currently in the
District is far greater than what is required under the previous State regulations
given the number of students (only 5 would have been needed).
Over time the
Cranston School System has hired social workers beyond the requirements of law,
regulation or contract.
The Team is aware the phase out of these extra
Social
Workers will take time, but the Team recommends that 6.6 Social Workers can be
eliminated, still
leaving 10 Social Workers for the 2010 budget.
The elimination of 2 DP teachers and 6.6 Social Workers will save the District
approximately
$526,750
.
The Team intends to complete its review of the Special
Education program and recommend additional cuts for the years subsequent to
2010 in the Final Performance Audit Report.
9.
Central Supply:
Given today’s technology and the delivery capabilities of office product suppliers
there is no longer a need for a Central Supply function in a school district.
Cranston Public School should consider elimination of this function.
The two individuals responsible for the operation of the Central Supply function
are custodians and could easily be reassigned to fill positions vacated by other
custodians whom have retired.
In the interim, they could be used to fill in for
absentees of custodians at other schools reducing the need for overtime.
7
Elimination of the Central Supply would save two custodial positions at a savings
of approximately
$90,000
.
10.
Saturday Detention at the High School:
Cranston has eliminated Saturday detention at the middle school level for the
2009 budget but there remains
$15,000
for Saturday detention at the High
School
level.
The Team recommends the suspension of Saturday detention at the High
School level be eliminated as it not required by Law, Contract or Regulation.
11.
Current Teacher Negotiations:
The Team is concerned some of the above recommendations may be ignored
because the District is restricted from making layoffs in excess of one percent of
the number of teachers covered by the contract.
With that said, the District is not
required to replace retirees so the number of layoffs can be the total of attrition
plus the one percent.
In addition, the District is in negotiations with the teachers
union as this report is being written.
Eliminating this restriction is a very
important issue for those negotiations during these difficult economic times.
During the fiscal year ended June 30, 2009 the School Committee reduced
System-wide Supervisors at a savings of approximately 1.2 million dollars.
This
reduction is now subject to an Arbitration process.
The Team agrees with the
action taken by the Cranston School Committee including the re-instatement of
the System-wide nursing supervisor for health and safety reasons. This reduction
should be carried forth to the 2009-10 Budget.
The result of the Arbitration
process, however, may require this reduction to become part of the negotiation
process.
Failure to maintain this reduction would have serious impact on the
2009-10 Budget.
12.
Transportation:
The Team recommends the District immediately request proposals to outsource its
transportation services.
Providing transportation services “in house” distracts the
administration from the primary purpose of the District which is to
provide the
highest quality of education possible with the limited funds provided by the City
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and State of Rhode Island.
Cranston is just one of only three communities still
providing “in house” bus services.
The Team is concerned that providing transportation services in house results in
unnecessary legal risks.
Providing transportation services requires specialized
knowledge of an ever- changing set of laws and regulations.
Keeping up with
these laws and regulations distracts the District’s administration from its goal of
providing a quality education to its students.
A review of the transportation capital budget and expense accounts suggests that
the District has no formal financial plan to upgrade its current inventory of busses.
The age and condition of the District’s busses are unfortunately not at the same
level maintained by the transportation companies providing service within the
State of Rhode Island.
It would cost the district hundreds of thousands of dollars
to upgrade its buses to a more appropriate level.
The Team is also very concerned about the hidden costs of the “in house”
transportation services.
For example, it should be noted the cost of health
insurance and dental for the drivers is nearly 1.5 million dollars.
It is important
when comparing proposals received from the transportation companies to the
District’s that the District identify all of the costs (direct and indirect) related to
“in house” bussing.
This will be further examined in the final Performance Audit
Report.
13.
Food Services:
Like Transportation, the Team recommends the District immediately request
proposals to outsource its food services operation (school lunch program).
The
school lunch program generated $2,642,089 in revenues in fiscal year 2008 but
incurred $2,878,284. This resulted in a $236,195 deficiency of revenues over
expenditures and has created a financial burden on the District’s general fund.
The Team has analyzed various accounting data, reviewed personnel by site, food
costs by site and discussed the operation with the District’s CFO and program
manager.
A member of the Team also had discussions with representatives of a
private school lunch operator.
More analysis of the school lunch program and
additional recommendations will be presented in the final Performance Audit
Report.
In the interim, between the Districts’ request for proposals and the signing of a
contract with a food service provider the Team recommends the school lunch
program be restored to a breakeven status saving the
$236,195
deficiency.
When
the school lunch proposals are received it is important all food service costs
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(direct or indirect) of the District be included in the analysis, for example health
and dental costs of the food service staff is approximately $234,378.
14.
Health and Dental:
The Team has not completed its review of the health and dental costs of the
District at this time but has read the 2008 Group Health Insurance Program Audit
Report prepared by Kevin D Walsh, MBA LIA.
The Team was impressed by the
scope of the engagement and the impressive list of suggested savings.
The Team
will consider all of these recommended savings when it presents the final
Performance Audit Report.
One of the recommended savings in Mr. Walsh’s report is consistent with the
Team’s initial observations.
The Team recommends an increase in the employee
co-share of at least 5% which (per Mr. Walsh’s calculations) would save the
District approximately
$1,200,000
.
The team is aware this increase in the co-
share will have to be negotiated with the unions.
The Above-Recommended Savings
1.
Elementary School Guidance Counselors
$
269,500
2.
String and Bank Music Program
306,360
3.
The Enrichment Program In Cranston
306,360
4.
Middle School Sports
123,470
5.
High School and Middle School Extracurricular Activities
100,000
6.
High School Sports
130,000
7.
Certified Nurse Teachers
0
8.
Special Education
250,000
9.
Saturday Detention at the High School
15,000
10.
Transportation
0
11.
Food Service
236,195
12.
Health and Dental
1,200,000
Total Approximate Savings
$3,553,635
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Interim Performance Audit Report
The Team is hopeful this Interim Report will be helpful to the Cranston School
Committee and the City Council.
The report suggests a list of items that are funded with
discretionary dollars which are not required by law, contract or regulation.
Therefore the
elimination of these expenditures would provide funds to be used in an effort to balance
the District’s budget.
Once again, the Team must point out the spending of District funds
is by law at the sole discretion of the School Committee.
This Interim Report will be followed by a more detailed Performance Audit Report. The
above recommendations will be further reviewed and commented upon in the final report.
In addition, the following non-exhaustive list of additional items will be addressed in
detail within the final Performance Audit Report.
1.
Address Judge Savage’s requirements regarding maintenance of effort.
Judge
Savage stated the following in her Order:
“Finally, this Court holds in abeyance Count V of the Mayor’s
complaint, subject to the filing of the requisite corrective action plans,
completion of the joint financial and program audit for fiscal year
2008-2009, any other analysis for fiscal year 2007-2008 and further
proceedings in this action.” (See page 39 of the Order)
2.
A section by section review of the Cranston School District’s Policy Manual.
3.
A detailed review of student/teacher ratios.
4.
A detailed review of Special Education to include staffing and programs.
5.
An evaluation of the 2008-09 student housing plan to determine if the change
from a K-5 and 6-8 housing plan to a K-6 and 7-8 housing plan has resulted in an
efficient and cost effective use of existing classroom space and the personnel
required house and staff the Districts K-6 regular education programs.
6.
A detailed examination of the utilization of portable classrooms and alternative
classroom and support services spaces.
7.
Recommendations regarding the need for the District to develop a long term
facilities plan which will meet the District’s future program and housing needs.
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