15 Sep 2014
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UPDATE: Drew, Nocera Release Statement on Deficit

The mayor and school board chairman say the issue over who had control of the funds was a "philosophical disagreement" and that the school district agrees that it has to pay back the money.

 

There is no "missing money" from either city or Board of Education budget accounts and there is no evidence of criminal wrongdoing in the ongoing issue of how the school board incurred a $1 million budget deficit, Mayor Dan Drew and school board Chairman Gene Nocera said in a joint statement released today.

The statement was in reaction to comments made Monday at the Board of Education's budget committee meeting and, apparently, to comments made by some residents who have questioned how the deficit occurred and who is to blame.

In the statement, the mayor and board chairman say the problem appears to be related, in part, to the school's accounting practices and to the administration's decision to use grant funds in excess of what was disbursed to the district. The statement said both city and school officials are focused on fixing the problem and making sure it doesn't happen again.

The pdf above contains the entire statement.

 

EARLIER STORY:

Did the city violate a state requirement when it took, two years in a row, a special education grant intended for the as school officials have claimed?

A series of emails between city and school finance officials indicates school administrators believe the city violated the requirement. The emails include a memo from a state official that says cities and towns cannot keep certain special education funds if their local school districts need them to cover unexpected special education costs, as Middletown did in 2010 and 2011.

The emails, during 2010 and 2011, also shed some light on how terse the relationship had become between city and school finance officials, including one in which city Finance Director Carl Erlacher describes school Business Manager Nancy Haynes as “unprofessional” and another in which he tells her to “have her boss call me.”

“Carl, it is unfortunate you find my attempt to improve financial controls and processes unprofessional,” Haynes replies in an email to Erlacher. “As a fellow finance professional I would have expected support.”

You can view the emails, as well as related financial data and an outline of events leading up to the school board’s realization that it has a $1 million deficit, in the pdf above.

The missives are part of a that has waged between the city and school board over the last couple of years regarding who controls certain funds that come to the city but are earmarked for school expenses.

The dispute has included a lawsuit the school district filed in 2010 to block the city from using state education funds. The school district argues that the city twice, once in 2010 and again in 2011, used the so-called “special education excess costs grant." The school district says the city used some $857,000 in those grant funds to balance its own budget. The missing school funds are largely what have created the current $1 million shortfall in the school board’s budget, officials said this week.

The dispute appears to have dissipated somewhat with the election of Mayor Dan Drew in November, although some school board members are now raising questions about why the city is not stepping forward to pay the district back the $857,000.

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