City Council Questions School's Business Manager Hire

City councilors expressed disappointment in the school department's hiring of a business manager instead of leaning towards shared services.

Members of the Newport City Council expressed their disappointment over the school department's hiring a new business manager during its meeting Wednesday night. The school committee approved a contract with Joan Tracey, Deputy Director of Finance of the Newport Utilities Department during Tuesday's school committee meeting.

Tracey's contract comes on the heels of an analysis of the school district's finance department's deficiencies by accounting and consulting firm LGC&D, LLC.

Business Manager John Miley recently resigned this month, leaving the position open as of June 30.

Waluk said the hiring was counterintuitive to the idea of cost-saving by increasing shared services between the school and city departments, and was disappointed in the actions of the school department and school committee.

“It completely undercut anything we want to do in terms of consolidating services,” he said.

The position should have remained vacant, he said, until the city could decide how to reconfigure the finance department.

“Our city department works. The school's is broken.”

Councilor Harry Winthrop also said he was “profoundly disappointed” about the hiring, saying it happened at the eleventh hour.

He added that due the actions of the school committee, he will now only consider level-funding the school departments budget. The proposal currently requests over $600,000 more than last year's budget.

“I dont think any one expected the school department to work without business manager,” Ambrogi said on Thursday afternoon in response to the council's comments. “My thoughts were that there was going to be general oversight between the city finance officer to work with them.

During last Tuesday night's school committee meeting, Susan Johnson, of LGC&D, addressed several holes in the school department's financial operations, including budget maintenance, conforming to a uniform chart of accounts (UCOA), and flaws in accounts payable, payroll, and cash and revenue receipts systems.

Johnson outlined observations and recommendations to remedy the ineffective or inefficient practices. View all observations and recommendations here.

“It's disappointing because we kept asking about the need for audits, and then we find there's no internal controls, and that we're not really using UCOA and the budget encumbrance calculations are a little bit fudged,” School Committee Chair Patrick Kelley said on Tuesday. “It's fortunate we didn't have financial disaster.”

In response to the report, the committee unanimously approved an action plan, which included hiring a new Business Manager. The hiring was a “large part” of the action plan, the memorandum from Superintendent John Ambrogi said.

The corrective action plan is made up of five steps.

First, the hired Business Manager will be able to upload the school department's budget into the general ledger, which will be available for employees responsible for purchasing. Immediate access to the ledger, which was previously monitored on a monthly basis, will provide a more accurate picture of encumbrances, the plan states.

Second, a structure for the Uniform Chart of Accounts (UCOA) will be brought online by July 1, 2012, in time for the Fiscal Year 2013 budget to be on track.

Third, the school department will require the Lawson System for all purchase orders except emergencies, stipends, and some payroll related activities. Only the Business Manager will be allowed to add new vendors to the vendor list and compare the approved disbursement journal to issued checks. Payments will now be mailed by an individual in the Central Occies, other than the Accounts Payable Clerk.

Fourth, a review of the bi-weekly payroll process by the School Business Manager willl be conducted for each payroll. An edit report will be generated that lists all changes to the payroll data and will be reviewed.

Fifth, the Business Manager will begin procedures to reconcile revenue and other transactions recorded by the City to supporting documentation.

In addition to the five items in the corrective action plan, the Business Manager will need to
“ensure that each expenditure is reasonable, appropriate, and within budgeted amounts in

accordance with procurement rules and properly recorded in compliance with UCOA,” the plan states.

In the memorandum, Ambrogi said Newport Public Schools “would not be able to operate” without an on-site business professional to oversee the action plan items.


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