Audit of Montclair schools finds four areas in need of improvement
An audit of the Montclair public school district’s finances for the 2020-21 school year recommended four corrective actions, three of which are repeat recommendations from past years.
The audit found employment contracts, especially for tenured staff, were not updated; procedures regarding student activity funds were not followed; outstanding balances on student food service accounts were not being settled, and capital assets records were not updated.
The district hired Nisivoccia, LLP to conduct the audit, which was presented to the Montclair Board of Education at its March 21 meeting. In New Jersey, school district audits must be completed by Nov. 30 and submitted to the state by Dec. 5, according to audit information on the New Jersey School Boards Association website. The state granted extensions for the 2020-21 school year.
The board unanimously voted to accept the audit’s corrective action plan at its April 6 meeting.
“A lot of your financial records are in great condition,” Nisivoccia partner Valerie Dolan told the board at its March 21 meeting. The board is basing its decisions on “reliable, sound financials,” she said.
However, the audit identified four areas in which the district could use improvement.
“Montclair has always been unique in that a lot of [issues] are more districtwide,” Dolan said. “You see it normally in some of the other districts where there might be one outlier, one school, that might not be following the rules. You consistently have most of the schools not following procedures.”
Nisivoccia conducts audits in over 70 other school districts, she said.
“We have a real opportunity here just to administrate better and meet the corrective action plan recommendations,” board member Kathryn Weller-Demming said at the March 21 meeting.
One of the audit’s findings, which has consistently shown up in annual audits since 2017-18, according to audit reports published on the district website, is that employment contracts were not executed annually for tenured employees.
Tenured employees already have a standing contract, but the annual signing of an addendum to the contract provides clear and updated details, including salary changes, Dolan said. The updated contracts are helpful for the district, especially when an employee is filling multiple positions or roles, such as helping with a student club, she said. The recommendation is that procedures be followed.
The repeated nature of the recommendation can be partially attributed to personnel changes in the human resources office, Dolan said. In 2020, current Director of Human Resources Damen Cooper replaced interim Director Paul Arilotta, who held the position during the 2019-20 school year.
Arilotta’s hiring followed a series of mishaps that led to Montclair’s teachers not being paid their full salary following new contract approvals for the 2019-2020 school year.
In other districts, the contracts are usually sent out in the summer, often in letter form, and are taken care of before the school year begins, Dolan said.
“This is ongoing,” she said. “This isn’t [the fault of] any one person.”
The second finding revealed that procedures for the tracking and handling of student activity funds were not correctly followed, a finding that appears in audits dating back to at least the 2013-14 school year, the oldest audit available on the district website.
The audit found that accounting records did not match bank statements at Renaissance at Rand Middle School, and that Bradford School receipt journals were not maintained. Several schools failed to make deposits in a timely manner, payment signature approvals were missing, and checks more than six months old remained uncashed.
In 2018, the district created a new procedures manual for the handling of student activity funds and provided training for all principals and secretaries, according to the audit management report. The audit recommends the district continue to communicate standard policies and procedures for all student activity funds to ensure that they are adhered to.
The third finding showed a large number of student accounts owed the district money for food services — a finding that has appeared in annual audits since 2015-16. Student accounts were being charged; however, the outstanding charges were not being collected, the report said. The district had to place a $74,930 allowance in the food service fund to cover the missing student funds.
The audit recommended that the district evaluate and collect or cancel the students’ food service accounts at the end of each year. The district administration has already implemented a procedure that reviews all open balances bimonthly, and several accounts have been collected or canceled during the current school year, the report said.
The final audit finding, which has not appeared in past audits, shows that the district’s capital assets records are not up to date.
The district must track all of its fixed assets in two ways, for insurance purposes and in context with past district spending on all projects, Dolan said. As the audit was being conducted, the district was also working on repairing facilities damaged by flooding after Hurricane Ida and thereby making changes to many of its assets, she said. The district’s records should reflect the updates and adjustments, she added.
The administration will research and contract with an outside appraisal company to prepare an updated inventory of capital assets, according to the management report.