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Audit: Special Ed. Money Misspent; Collaboratives Questioned

Massachusetts' state auditor is calling for far-reaching changes to the way education collaboratives work in her state after audits of three of the commonwealth's 30 such collaboratives uncovered millions of dollars in questionable spending, oversight problems, and potential conflicts of interest.

In Massachusetts, which has many small school districts, the law allows districts to join together to provide some services more efficiently. There are 30 such merged groups that provide services for about 8,500 students with disabilities. More than 75 percent of Massachusetts school districts use collaboratives to work with students with disabilities, according to the Boston Globe.

In the last few years, the state auditor has inspected records from five collaboratives, with the most recent reviews completed this week. Across the collaboratives, Auditor Suzanne Bump found questionable spending on entertainment, staff salaries, and benefits. She also found collaboratives being used as keepers of slush funds for member districts, a failure to provide properly licensed staff to work with students with disabilities, and some collaborative board members who also were on boards of related organizations. In addition, she found insufficient state and local oversight capacity.

"The pervasive deficiencies we have seen in this small sampling of the 30 different collaboratives lead us to conclude that this is a broken system," Ms. Bump said in a statement. "These systemic problems put at risk the interests of taxpayers and special needs students, both of whom were supposed to benefit by the creation of these collaboratives."

The audits released this week cover three collaboratives that together generate more than $31 million in annual revenue and serve 32 school districts and about 1,000 students with disabilities.

In one of those, the Merrimack Special Education Collaborative, the auditor found more than $26.7 million in inadequately documented and potentially unallowable expenses to an affiliated nonprofit corporation called the Merrimack Education Center over three years. To put that into perspective, the collaborative's annual budget is about $20 million.

The auditor also found about $6.1 million in inadequately documented salary expenses and more than $4.3 million in other expenses that were undocumented or appeared to be unallowable because they were for non-business-related items, including at least $1,255 for alcohol; at least $18,284 for meals and other entertainment, such as farewell parties for staff members; $142 for 30 pounds of swordfish for a cookout for special education directors; and at least 37 purchases totaling $5,735 for golf-related charges.

Aside from spending problems, Ms. Bump found that during the last three years, only 30 percent of Merrimack educators were fully licensed. The rest worked under waivers, some of which weren't in compliance with waiver rules. In other cases, they were working with neither a waiver nor the proper licensing.

The collaborative also failed to carry out some basic government functions. Ms. Bump found "numerous instances" in which Merrimack appeared not to have complied with various laws, including the state's public bidding laws, finance laws, pension laws, and the open meeting law, as well as state regulations relative to potential conflicts of interest and educator licenses and evaluations.

In the Southeastern Massachusetts Educational Collaborative, Ms. Bump found that more than half of the organization's revenue comes from contracts with state human service agencies for services including employment support and residential and adult day health services for adults older than 21. "These adult services appear to be inconsistent with the legislatively stated purposes of an educational collaborative because they do not directly strengthen school programs or increase the educational opportunities for children in the communities SMEC serves," the audit says.

The third audit released this week, of the READS Collaborative, found that its executive director may have been overpaid by as much as $118,072. Also, the audit found as much as $1.3 million in questionable administrative costs, and a questionable loan of nearly $1 million from READS to its related-party corporation—payment for which READS charged non-member school districts hundreds of thousands of dollars in additional fees.

To curb these problems and dozens of others, Ms. Bump recommended the state enact a number of reforms. Among them:

• The state must clearly define services collaboratives may provide;
• The Massachusetts Department of Elementary and Secondary Education's authority to oversee and penalize collaboratives must be increased;
• Collaboratives should be subject to the kind of financial reporting and auditing required for charter schools;
• The composition of collaborative governing boards should be changed to ensure members have the skills, objectivity, and time necessary to serve the organization.

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