SPED Costs Are Wildcard In Schools Budget
Special Education [SPED] expenditures are unpredictable, a wildcard distorting the school budget, consuming about 16 percent of the School Budget, for various reasons making it difficult to predict future spending needs for the whole District - all this, according to the Independent Auditors Report conducted in response to the budget shortfall discovered in July of 2013.
Because of the difficulty of predicting SPED spending, the District's previous Office of Business and Finance flat-funded the program without making adjustments as expenses mounted. This led, in significant part, to the unexpected budget shortfall discovered in July of 2013 by newly hired District Director of Business and Finance, Jared Stanton.
The Independent Auditors concluded that lack of expense tracking led to inaccurate budgeting and significant overruns in special education spending, explaining that the District Business Office had been able to mask these special education cost overruns by tapping surplus funds in the Excess and Deficiency Account, one-time grants, savings from health insurance accounts and revolving accounts.
But, the report added that, "by the end of 2014, there will be no more surpluses in those accounts to continue covering under budgeting of special education costs", thus exposing the extent of the problem.
The Commonwealth of Massachusetts legally mandates SPED spending above all other education spending, making budgeting for other educational programs difficult in an environment where special education expenses are a moving target. If special education needs more money, all other education spending must be reduced to provide special education monies.
For example, addition of a single high-needs student to the schools special education program can significantly increase total program expenses due to the high cost of outside tuitions and transportation.
The Independent Auditor's Report explains, "If the Member Towns do not provide adequate funding to meet the needs of the District, then costs must be reduced in those areas of the budget not legally mandated as is the case with the provision of special education services."
Due to the highly variable and unpredictable nature of SPED spending and its potential for out-size impact on other educational programs, the audit report conducted by Accountants Melanson Heath and Company, recommended monthly tracking of special education spending. But, because of past surprises, the school administration has taken this recommendation a step further, now tracking Special Education spending weekly.
In addition to the underreporting of SPED expenses, a primary error leading to the budget shortfall was something more mundane: not properly accounting for dramatic and easily charted changes in revenue. While not accurately accounting for increases in salary data properly was a factor, not accounting for dramatic changes in revenue was a more significant factor leading to the surprise budget deficit.
In fiscal 2012, the District received a final tranche of a $328,000 jobs grant. In addition, the District health insurance account had a budget surplus, reducing overall costs in fiscal 2012 and contributing to a one-time budget surplus of approximately $841,000.
Between the jobs grant, the decreased health insurance costs and savings in various utility accounts, "the District was able to cover appropriation deficits of approximately $900,000 in various special education professional, paraprofessional, contract services, transportation and tuition accounts." But when formulating the 2013 budget, the District's office of Business and Finance did not adequately provide for the higher special education costs because they had not been tracked properly and because the significant loss of revenue from the previous year was not taken into account.
Finally, the Independent Auditors Report recommends that the Districts Director of Business and Finance should "continue preparing a report of appropriations voted and expended to date together with costs remaining to complete the fiscal year. ." The Independent Report added, "Those reports should contain comparisons to prior year and actual amounts, so that adequacy of present funding can be determined. The reports should be presented to the School Committee on a monthly basis together with a narrative progress report on the status of all accounts."
