Audit flags issues with Portland school department finances

Sep. 23—After a recent city audit flagged a handful of issues with school department finances, the district has taken steps to restructure its finance department and increase staff, the superintendent told a City Council committee Thursday.

A letter from the auditing firm Melanson describing some of its findings for the year ending June 30, 2021, was presented to the council’s finance committee Thursday by the firm and city staff. It included three recommendations in response to what the firm called “material weaknesses and significant deficiencies” in school finances.

The letter noted that a lack of segregation of duties exists and said all school finance department personnel have full access to modules within the software system they use. It said reconciliations of key general ledger accounts were not done in a timely manner, including year-end reconciliations that continued six months after the year’s end.

The letter also noted that some recommendations from the previous year’s audit, such as adopting a cash receipt policy and improving controls over student activity funds hadn’t been implemented.

The letter included a response from the city to the issues, which noted staffing challenges and vacancies as contributing factors.

Superintendent Xavier Botana told the committee Thursday the school district’s finance department has 11 budgeted positions and an additional four temporary positions. Of the 11 budgeted positions, Botana said three are vacant, though one will be filled Monday, and two of the temporary positions are also open.

Botana said the school board’s finance committee and district leadership met in May to discuss the results of the audit and a plan for staff restructuring. He said the 11 budgeted positions represent an increase of two additional positions approved by the board.

“This current staffing brings us close to the highest level we’ve ever had,” Botana said. “We think this is the right size for the department and it will allow us to have some of the segregation of duties that were highlighted by the audit.”

Botana said the district is also considering outsourcing its payroll and that it has restructured the finance department, eliminating the chief financial officer position and moving finance under the oversight of a new director of district operations.

The audit also raised some issues with city finances. A presentation of the findings by Alina Korsak, a principal at Melanson, noted “a significant general assistance over-expenditure, although temporarily funded by the state and FEMA, was the biggest audit surprise” and said the long-term effect would need to be evaluated.

Director of Finance Brendan O’Connell said the finance department has gotten information from the director of social services about steps the city is taking to reduce general assistance costs, including no longer placing families in hotels in other municipalities and moving 90 families into a hotel in Saco being paid for with state funding.

“I think after seeing an alarming trend of increased significant costs, we’re starting to see things flatten out, but it is a slow process,” O’Connell said.

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