SUBSIDIES PAID BY MINUTEMAN MEMBER TOWNS FOR THE BENEFIT OF 360 OUT-OF-DISTRICT TUITION STUDENTS

There was obvious confusion on the part of students and parents attending the September 10th meeting who were laboring under misconceptions. While the meeting’s agenda did not provide for debate on statements made by speakers, neither the administration nor school committee officers past and present took the time to walk to the podium to clarify the misconceptions that included Out-of-District student enrollment, and the operating deficits and loses created by an unnecessarily large and underfunded tuition student enrollment. Annual tuition deficit loses total $2.5 million every year that must be paid, and are paid by the District’s 16 member towns through over assessments.
THE SIMPLE AND STRAIGHT FORWARD ANSWERS TO THESE MISCONCEPTIONS
A. Massachusetts laws clearly state that while out-of-district students may apply to a vocational program at a school outside their district under specific and narrow guidelines, those same laws again clearly state that Minuteman or any other State vocational high school is not obligated under the law or otherwise to enroll even one out-of-district applicant. Enrollment is by invitation only and is not a legal entitlement, but has been an administration implied legal right for years contrary to MGL.
B. Non-member cities and towns sending tuition students to Minuteman historically have never contributed adequate tuition payments and fees to equal all the educational services and benefits Minuteman delivers to educate their students. There is always a $7,000 under funding deficit for each of 360 tuition students that creates a debilitating $2.5 million in Minuteman deficits every year. The entire $2.5 million in deficits become non-member subsidies paid for by the Minuteman’s 16 member town through undisclosed and therefore unauthorized assessments.
TUITION DEFICITS
Point (B) above casts a dark shadow on the Minuteman administration’s financial policies that have been defended and shielded from criticism and forensic audit by the current chair of the Minuteman school committee and also the long time chair of the Minuteman finance committee. Together, the administration and the chair they have created a tuition revenue anomaly purposely kept ambiguous and un-audited. Together they have knowingly coerced the District’s 16 member towns into paying $2.5 million in non-member subsidies every year without member towns’ knowledge.
After reading the details below, member town voters will be able to make an informed decision on whether to continue to subsidize Boston, Medford, Watertown, Waltham and 30 other non-member towns.
HOW AND WHY MINUTEMAN DISTRICT TOWNS ARE OVER ASSESSED
There’s some basic math below (add and subtract and a couple of percentages) you don’t have to be a math major or CPA to understand what’s taking place.
1. The key factor to understand is that the Minuteman budget process directly determines member assessments because the bills left unpaid after applying State Aid are the responsibility of member towns to pay through assessments and E&D deficit spending.
2. The administration’s FY2015 revenue budget plan totals a normalized $19.0 million to pay for goods and services provided transparently to each and every Minuteman member and non-member student.
3. It is a published fact that non-member enrollment is 47% of total enrollment. As such, non-member cities and towns should be contributing $8.9 million towards their half of all the services and benefits provided for them by Minuteman. But this is not the case and never has been. Non-member towns are only contributing $6.4 million towards their shore of costs, or $1 for every $2 in revenue contributed by member towns.
4. Member towns must generate and contribute $12.6 million in needed revenues to keep the school running. Of the $12.6 million generated by member towns, $2.2 million is in the form of Chapter 70 education grants. The amount of Chapter 70 grants is based entirely on member town student enrollment. Non-member students are never included in Minuteman Chapter 70 grant calculations.
5. This leaves a balance of $10.4 million in member town assessments and E&D deficit spending. The $2.5 million in deficit subsidies are embedded in the $10.4 million member towns pay in assessments.
6. Since state aid had been applied and level for years and the district is not allowed to borrow to balance the budget, member towns as final payers are left as the only revenue source to pay tuition deficits.
7. As responsible final payers member towns have unknowingly been paying these subsidies to eliminate tuition deficits for the last 7 (seven) years. If you review the FY2015 member assessment sheet, there is a $1.8 million catch-all column named, “Total Remaining Operating Assessment” which totals $1,899,537. This is where the largest portion of subsidies is passed on to member towns. The remaining $600,000 is embedded in the assessments column, “Estimated State Minimum Assessment”.
8. If you review FY2013 and earlier school audits you will see an additional $2.4 million in off-budget and unauthorized Instruction, Other Services, and Administration expenditure account codes exceeding the budget by the need to provide educational services and benefits to 360 under funded non-member tuition students, and to pay ballooning Administration costs. There is good reason to believe this pattern has continued into FY2014 and is continuing though FY2015.
These anomalies have been reported to the administration and school committee officers past and present repeatedly over the last 3 (three) years, as a result you will be told the following “justifications” intended to defend the above financial anomalies:
A. No one in the administration or on the finance committee understands the message (anomalies), and the messenger is wrong and the messenger is spreading false information. Sort of having it both ways: they know there’s an error in something they don’t understand? There is no longer a Certified Public Accountant to supervise and certify the budget and assessment processes and reported anomalies since the previous school business director (a CPA) resigned in protest over the superintendent’s unsound fiscal policies and actions.
B. The superintendent and chair will say the auditors have reported no budget discrepancies. This is true because neither the administration nor the finance committee have requested or required the auditors to reconcile the budget with actual money collected and actual dollars spent by the administration. This is not an accident or oversight because the reconciliation would identify windfall revenues and unauthorized expenditures. The auditors are not asked to provide these reports because the administration and former finance committee chair would be forced to admit there are under reported revenues and unauthorized off-budget expenditures used to finance over assessments.
C. These are one time assessment errors. Multi-million dollar over assessments are evident in the last 7 school operating budgets. If the over assessments were in fact simple accounting errors, the $2.5 million in “unavoidable” over assessments would be unspent and returned to member towns as significant Emergency and Deficiency fund increases, but this is not the case. For the last 7 years, the E&D fund has averages less than $600,000 when it should have increased to over $3 million each fiscal year by the over assessments. Any funds exceeding 5% of the annual budget by law must be used to reduce member assessments, but this is not the case. Budgets and assessments have increased by a minimum of 4% to 5% each year for the last 7 years. The E&D has actually decreased over the past 7 years and has never exceeded 5% of the annual budget. The undeniable and evident explanation for the $2.5 million not appearing in the E&D is because the $2.5 million is spent every year on tuition student educational services and inflated administration overhead and is never returned to member towns.
D. The administration and former chair of the finance committee will tell everyone that under reported windfall tuition and other under reported revenue resources are returned to member towns in the next budget. This is not and has never been the case and far from reality. For the last 7 years, budgeted tuition revenue has been under reported and the windfall revenue the administration collects is never credited towards reducing assessments in the next year’s operating budget. All tuition revenue is placed in off-budget special revolving accounts and never presented during the budget process as a revenue source to reduce assessments.
E. Unspent and under utilized tuition revenue in revolving accounts is added to, carried over to the next year and then spent off-budget out of revolving accounts as the superintendent and the assistant superintendent for finance so dictate to the finance committee. The chair of the finance committee then presents and certifies the misstated budget for the school committee.
The only reasonable and logical financial conclusions are that the budget and assessment processes are broken. Member towns are paying concealed over assessment to subsidize tuition payments for out-of-district cities and towns that include Boston, Medford, Watertown, Waltham and 30 other municipalities.
The processes must be investigated and corrected by an independent third party or the MA Inspector Generals office. The superintendent, his administration and school committee offices past and present have created a seriously flawed and corrupting environment in order to justify building the biggest new school possible using an inflated non-member population to justify increased MSBA grants regardless of the final cost to member towns.
These are dangerous financial policies and actions that put the educational future of our students at risk.