Central Massachusetts Special Education Collaborative
July 31, 2012 · Read the full official report (PDF) ↗
Published July 31, 2012 Audit covers July 1, 2009 – June 30, 2011 Under Suzanne M. Bump · 2011–2023
source
“Our audit identified that CMSEC failed to properly administer its retirement benefit programs, which caused a number of its employees to lose the opportunity to earn additional retirement income.”
Read the plain-English breakdown
This is a state audit of the Central Massachusetts Special Education Collaborative, a public education organization serving students from school districts, mainly Worcester and Webster.
“The Central Massachusetts Special Education Collaborative (CMSEC) was established in 1975 as an association of two local school districts: Worcester and Webster.”
The State Auditor reviewed CMSEC to see whether it had proper controls over money, payroll, purchasing, budgeting, benefits, and compliance with rules.
“The scope of our audit included a review and examination of certain aspects of CMSEC’s operations during the audit period.”
The findings matter because public money and employee retirement benefits were affected, including a reported surplus of more than $4.5 million and possible lost retirement income for workers.
“Finally, CMSEC had not established adequate internal controls over many aspects of its operations, which resulted in thousands of dollars in inadequately documented expenses.”
The auditor said CMSEC needed to fix retirement enrollment, change how it prices services, improve financial controls, and recover improper sick-time payments.
“CMSEC should work with the affected staff members, the SSA, and the State Board of Retirement to resolve this issue.”
CMSEC said it was taking steps to enroll affected employees in the state retirement system, improve pricing, seek guidance on reserves, and develop written financial controls.
“Affected employees (past and present) will be enrolled in MSERS by April 1, 2012.”
The audit is significant because it found systemic issues, not just isolated mistakes: retirement errors, pricing concerns, weak purchasing practices, improper sick-time payments, weak documentation, and accounting variances.
“As a result, we found over $24,000 in procurements that were not conducted in accordance with state law, $1,630 in improper payments to staff members for sick time that they did not earn, over $21,000 in inadequately documented expenses, and significant variances in CMSEC’s accounting records (totaling over $87,000 in one month) resulting from transactions that were not recorded in CMSEC’s financial records in the month in which they occurred.”
An education collaborative is a public arrangement where school districts work together to provide programs and services they may not provide as effectively alone.
“Two or more school committees of cities, towns and regional school districts and boards of trustees of charter schools may enter into a written agreement to conduct education programs and services which shall complement and strengthen the school programs of member school committees and increase educational opportunities for children.”
7 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Determine whether CMSEC implemented effective internal controls over certain aspects of its operations, including: cash management, administrative expenditures, payroll and benefits, procurement of goods and services, budgeting, and educator evaluations and licensure.
- Did not comply Conduct transaction testing in selected areas to assess CMSEC’s business practices and its compliance with applicable laws, rules, and regulations.
What the Auditor found
Why it matters: Eligible employees may have lost the opportunity to receive additional retirement income over their lifetimes.
Standard: Chapter 631 of the Acts of 1985 amended Chapter 40, Section 4E of the Massachusetts General Laws, establishing education collaboratives as public entities whose eligible non-teaching staff should participate in MSERS rather than Social Security. ( Chapter 631 of the Acts of 1985; Chapter 40, Section 4E, of the Massachusetts General Laws )
2 recommendations
- CMSEC should work with the affected staff members, the SSA, and the State Board of Retirement to resolve this issue.
- CMSEC should ensure that all of its employees are enrolled in the state retirement system and not the Social Security system.
Agency response & Auditor reply
Agency: "CMSEC has taken immediate action to address this issue for current and past employees with the MA State Employee Retirement System (MSERS)."
Why it matters: Member and non-member school districts may have been charged more than CMSEC’s actual cost of providing services.
Standard: Guidance from the Massachusetts Department of Revenue’s Division of Local Services and the Office of the Attorney General says governmental service fees should not exceed the cost of providing the services. ( Emerson College v. Boston, 391 Mass. 415, 427-28 (1984); Southview Cooperative Housing Corp. v. Rent Control Board of Cambridge, 396 Mass. 395, 402 (1985); Executive Office for Administration and Finance Bulletin No. 6 )
2 recommendations
- CMSEC should establish a pricing methodology for program services that is consistent with DLS and OAG guidelines.
- CMSEC should consult with DLS, OAG, and DESE to establish a method to remit surplus funds to member and non-member districts.
Agency response & Auditor reply
Agency: "The CMSEC has taken steps to implement a pricing methodology for FY13 that is based on actual anticipated expenses by program."
Auditor: "As stated in our report, we found that during our audit period CMSEC’s pricing system allowed it to charge excessive fees to its school districts, resulting in CMSEC’s accumulating $4,562,211 in total fund balances (profits) as of the end of fiscal year 2011, which is inconsistent with DLS and OAG guidance."
Why it matters: CMSEC incurred unsupported expenses, improper sick-time payments, noncompliant procurements, and accounting variances that increased the risk of waste, loss, or misuse.
Standard: CMSEC should establish internal controls and comply with Chapter 30B procurement requirements. ( Chapter 30B of the General Laws; Chapter 30B, Section 4 of the General Laws )
1 recommendation
- CMSEC should recover $1,630 from the six employees who were paid for sick time they had not earned.
Agency response & Auditor reply
Agency: "The collaborative has initiated the process of developing and documenting internal controls with respect to financial and management activities, including the matters shown on the attached list of topics under development."