State questions ANwSU bookkeeping

VERGENNES — The Vermont Agency of Education has sanctioned the Addison Northwest Supervisory Union by withholding state and federal grant funds, calling the ANwSU’s financial record “very weak” in a July 3 letter and citing many accounting problems in a July 1 report summarizing a June 10 fiscal monitoring visit.
That monitoring visit came two months after the AOE suspended many ANwSU grant funds because of the district’s failure to file required reports in a timely or satisfactory manner, ANwSU officials acknowledged last week.
Those funds in jeopardy totaled almost $1.1 million in the 2012-2013 school year. They include federal money for Medicaid, Title I Migrant, and Teacher Quality programs, plus funds to support math and literacy programs and special education. They also include state funds for afterschool and Reading Readiness programs.
New ANwSU Superintendent JoAn Canning, who was greeted on one of her first official days of work by the AOE report, confirmed on Thursday that ANwSU business manager Kathy Cannon has been placed on paid administrative leave.
In an email to staff that day, Canning said no jobs or programs at the four ANwSU schools are in immediate danger and that the AOE made no accusations of impropriety.
“I want to be clear that no serious legal issues were uncovered in this process. Please also be assured that you will receive your paycheck without delay. We are working with the Agency of Education to resolve all areas in need of improvement as soon as we possibly can,” Canning wrote.
ANwSU board chairman Jeffry Glassberg said officials are confident funding can be restored once ANwSU and AOE officials agree on what the AOE calls a “Corrective Action Plan” for the district to follow to fix the accounting problems.
“This is about having proper policies and procedures and institutional culture. We’ve made the right choice in terms of leadership to provide the institutional culture. JoAn has come from successful superintendencies where these issues have not come up. She knows how to make sure things get done timely and in conformance with requirements,” Glassberg said. “What’s in front of us is certainly resolvable. We need to have the systems in place to keep it resolvable.”
Glassberg said although the ANwSU board knew about persistently late audits and had taken steps to try to resolve that issue, members were never told of the April sanctions and only learned of the grant-reporting problems when the July 1 report arrived.
“While we were aware of some of the issues around reporting in general and thought we were making progress in terms of how we were approaching that, these issues regarding federal reporting are not things that would in ordinary course of business fall into the board’s purview,” Glassberg said.
“What’s of concern,” he continued, “is that the supervisory union was sanctioned on April 1, meaning that the supervisory union was notified that federal funds would be withheld because of failure to report. And the superintendent did not inform the board of that sanction. I and every other board member were completely unaware of that situation until that letter arrived.”
Just-retired ANwSU superintendent Tom O’Brien said on Friday he would withhold comment until he learned more about the current situation.
As well as the lengthy list of problems, the AOE report also provided the template for ANwSU to follow to resolve the reporting problems.
The July 3 letter, addressed to Glassberg, also stated that plan should include “1) Remove the current business manager within 30 days of signed agreement with AOE; 2) Install a new business manager, with the advice and consent of the AOE, within sixty (60) days of the date of the signed agreement.”
Problems identified in the July 1 report include:
•  “Staff … not entering budgets or encumbering funds in the accounting software.
•  “Time and effort documentation (for employees paid with federal funds) is not being reconciled quarterly as required.”
•  “There appear to be no local written procedures in place to address contract administration.”
•  “Staff was unable to produce an expenditure report that includes basic information such as the vendor name and check number for each payment.”
•  “The SU office uses an off-the-books checking account … to pay some federal grant-related expenditures. This separate checking account … is controlled by one employee — she writes the checks, signs the checks, balances the statements.”
•  “Some of the requested expenditures were found in a stack of invoices identified for corrections that hadn’t been processed for months.”
•  “Purchase orders are not numbered or controlled.”
•  Audits for the 2012 and 2013 fiscal years were not complete, “Subrecipient Annual Reports” for “multiple fiscal years” that are required were not filed, and third quarter AOE reports had not been filed on time.
•  Estimates were used for quarterly reports for federal Title I and IIA and Migrant Education grants because “business office staff reported they are unable to retrieve this information from the accounting system.”
•  “The SU is not performing the required reconciliation of the Personnel Activity Reports” for employees paid with grant funding.
•  “The SU’s inventory tracking spreadsheet lacks much of the required information,” and “The SU has not performed an inventory of federally purchased equipment.”
The report concludes, “The above findings represent serious concerns regarding the SU’s ability to manage federal grants. The SU is requested to submit, by July 31, 2014, a set of corrective actions that we mutually agree will correct the findings issued by the visiting team.”
The AOE plans a follow-up visit in the fall.
Glassberg said Superintendent Canning, who started her job July 1, and the board are moving quickly to address short-term issues, but are also taking a long view.
“The agency is eager for us to remediate the problems and restore funding,” Glassberg said. “We’re seeking to enter into a remediation agreement with the agency before the end of this month. So we think we’re on a path that will solve the immediate concern about funding. The broader issue is we’re on a path to fix systems so we have a series of policies, procedures and, most importantly, a culture of accountability.”
Again, he emphasized hiring Canning would help create that culture.
“We have recruited and I hope we are able to retain a highly qualified superintendent with a track record of experience, of being clear, transparent, accountable, running districts with systems and procedures that have proven successful in reporting,” Glassberg said.
Canning has acted, although not all decisions can be made public, she said.
“We’re taking a series of other steps that involve personnel,” Canning said. “There are actions under way as we speak we are not in a position to fully disclose,” adding, “The whole office is being evaluated at this point. We’re looking at the business system as a whole. So not just the policies and procedures, but what people are doing, their skill level, their knowledge, all of it.”
One move she can discuss is bringing aboard former Lamoille South district business manager George Cormier as a consultant; Cormier is also now helping the Burlington school district wade through its financial mess.
“He’s very well-regarded,” Canning said. “He often works with school districts that are in transition for business manager positions. He has led and sat on many search committees.”
However the short- and long-term solutions take shape, Canning said she is confident they will be found.
“We need to clean some things up here,” she said. “And our ability to do that is going to extend beyond addressing areas of the action plan. But I certainly feel extremely confident, and my hope is in the next month these pieces will be remedied and we will be able to recover those funds.”
Both she and Glassberg said they will make every effort to keep the public informed every step of the way.
“Our intent is to be as transparent as possible,” Glassberg said. “There may be more. We don’t have the more yet. We’re continuing to do the investigation. We can’t tell you there won’t be a rock we turn over.”
Andy Kirkaldy may be reached at [email protected].

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