Lowell School Board to Consider Next Steps After Audit

December 19, 2018 GMT

LOWELL -- After a third-party audit of the Lowell Public Schools found a district in “financial crisis” and out of compliance with regulations, what are the next steps?

That’s the question many officials are asking as the School Committee prepares to discuss the 20-page document drafted by Minneapolis-based firm CliftonLarsonAllen at their meeting at 6:30 p.m. Wednesday in City Council Chambers.

Several officials said the report paints a damaging picture of financial management in the district and the city.

“What is obvious to me is oversight failed and I want to see where and why it failed,” said Mayor Bill Samaras.

Ousted Superintendent Salah Khelfaoui and former Chief Financial Officer Gary Frisch were mentioned by name in the audit and some district employees were interviewed about the administrator’s performance.

City Councilor Rodney Elliott discussed a portion of the audit describing transfers approved by the city auditor, which should have required more documentation, according to the review.

“There is a lapse of communication between the auditor’s office and the financial offices at the schools,” he said.

As the chair of the City Council Finance Subcommittee, Elliott said he plans to schedule a joint meeting to discuss the audit findings shortly after the first of the year.

School Committee member Gerry Nutter said the first priority is ensuring the internal controls and safeguards the audit found lacking under the district’s former administration -- leading to multiple instances of overpayment -- are repaired. This sentiment was echoed by several other officials.

Nutter said this matter will be discussed at a School Committee Finance Subcommittee meeting at 5 p.m. preceding the full committee meeting Wednesday, though he believes the current administration has already instituted many of these guards. Nutter also spoke in favor of more detailed budgets with information like allowed offset percentages.

Nutter said he believes the previous School Committee did not ask enough questions until this year. Last fall, Nutter campaigned on a financial watchdog platform and his first term on the committee started in January of this year.

“There was not a lot of questioning or oversight by the last School Committee,” he said.

School Committee member Jackie Doherty said herself and fellow School Committee member Connie Martin did question the superintendent as far back as 2016. The two ultimately filed the motion to terminate Khelfaoui this July, starting a monthslong process finally concluding with Khelfaoui’s firing in November.

Lack of communication from the administration and support for Khelfaoui among other committee members made her dissent like “a voice in the wilderness,” she said.

“You can’t do anything without the majority vote and that’s so frustrating,” Doherty said.

In recent months, a divided School Committee embroiled in a clash over Khelfaoui’s termination has also been unable to agree on the financial condition of the district.

Those who supported Khelfaoui’s continued employment -- School Committee members Andre Descoteaux, Robert Hoey Jr. and Dominik Lay -- have questioned whether the budget deficit described in Interim Chief Financial Officer Billie Jo Turner was inflated. None responded to calls for comment on the audit early this week.

The other four School Committee members -- Doherty, Nutter, Samaras and Connie Martin -- supported the termination of the superintendent and have expressed concern over the district’s finances. Martin did not respond to a a call requesting comment.

“Given that there was such divisiveness on the committee (with) this administration, I think we needed that third-party review,” said Doherty.

Whether the opinions of any members of the School Committee have shifted in light of the audit is unclear. President of the United Teachers of Lowell Paul Georges, a vocal supporter of the former superintendent, said he is skeptical of the audit’s findings.

“I think the audit was not a full blown forensic audit,” he said. “It seems to be focused on specific areas or they were directed toward specific areas to explore.”

He said Khelfaoui and Frisch were not spoken to for the district’s internal review, but should have been consulted.

“There’s no way of knowing the commitments the city made,” he said.

Georges said he has requested a review of district finances from the American Federation of Teachers, the United Teachers of Lowell’s parent organization, after the district asked to open contract negotiations in light of the deficit. Though he declined to share the findings citing ongoing negotiations, he said the organization’s analysis confirms his “skepticism” of the deficit, which he says is inflated.

Samaras said putting “your head in the sand” will not solve the district’s financial troubles.

“The money’s not there,” Samaras said. “There’s no tricks that can be pulled. There’s no rabbit that can be pulled out of the hat.”

Nutter said he wanted the audit to address more specifically what policies and procedures need to be revised. With a charter school expansion and the high school project on the horizon, he said the district’s finances will likely only get more challenging.

Samaras said the audit -- which he believes cost all $50,000 the School Committee allocated -- was limited in scope by cost.

“We didn’t hire a first time group,” he said. “This is a well-known, respected group.”

Doherty said moving forward she she hopes to pursue money she believes the city should have released to the district, including an over $500,000 grant.

Councilor Elliott said the district shouldn’t count on additional funding from the city, which is facing its own money troubles.

“There’s no additional money on the city side to make up for this deficit in the school department,” he said.

Follow Elizabeth Dobbins on Twitter @ElizDobbins