Johnston has hired a Pennsylvania auditing firm to examine school finances.
“The mayor is seeking an independent, out-of-state auditing firm called PFM Group,” according to Johnston …
Johnston has hired a Pennsylvania auditing firm to examine school finances.
“The mayor is seeking an independent, out-of-state auditing firm called PFM Group,” according to Johnston Mayor Joseph Polisena Jr.’s Deputy Chief of Staff Dominique Turner. “The firm will come in and conduct a comprehensive financial and personnel audit of the school department.”
The agreement, approved by Town Council and signed with the Philadelphia-based education audit specialists, caps the firm’s fee at $68,000 ($66,000 for consulting and $2,000 for travel costs).
“PFM Group is a national leader in education audits and will provide a transparent, unbiased and professional process,” Turner wrote via email. “The audit will establish a baseline for future decisions and help identify strengths and weaknesses as well as any needs or excesses of the school department. This will ensure that when money is spent on the school department, it goes to the specifically tailored needs as identified by PFM.”
Johnston Superintendent Bernard DiLullo Jr. attended the March 13 Town Council meeting to answer questions if asked.
“The Mayor and school department agreed to have a consultant come in to analyze our operations,” DiLullo said before the meeting. “Hopefully the outcome will be suggestions to more efficiently offer our services. This will be helpful going forward as we assess our programs, staffing patterns and needs.”
Town Councilman Robert J. Civetti ultimately voted against hiring the firm — not because he disagreed with a full examination of school finances, but because he thought the audit should also dig through the town’s coffers.
“I just think there’s more that we should be hiring them to do — not just go after the school department,” Civetti told his fellow council members.
Soaring project costs
Two weeks ago, Polisena informed the Johnston School Building Committee that the town’s estimated $215 million facilities overhaul faced booming construction costs and skyrocketing interest rates (overshooting the approved bond by around $50 million total).
The project — previously pitched and planned as a newly constructed town-wide elementary school, new early childhood center, and major renovations at the middle and high schools — may be altered significantly to trim the overall project price tag.
Last month, Polisena promised a revised plan by late summer.
School Building Committee Chairman (and School Committee Vice-Chairman) Joe Rotella drew a line between the town-wide facilities overhaul and the proposed audit.
“This is not about the school project,” Rotella said. “It is a proposal by the Mayor to examine the adequacy of local funding to the school district. The Mayor's office can fill you in on any more details.”
Polisena has promised residents there will be no tax increase to cover the bond, and that scheduled payments by Amazon (once the Hartford Avenue robotic sorting facility opens) will cover the school building overhaul costs.
“This has nothing to do with brick-and-mortar school construction and is only for the purpose of optimizing operations and spending and saving where needed,” Turner explained.
Not your average audit
Town Finance Director Joseph Chiodo said the school-wide audit falls under a “highly specialized field.”
He said it’s “not just a regular audit.”
“There’s other people that do it but they wouldn’t respond to me,” he told Town Council.
Chiodo said he contacted three firms in all; one wanted to farm it out and another never replied. The third, PFM Group, was willing and able to provide the services requested by the town. Town Council’s approval was required to begin work.
Civetti arrived at the March meeting with questions.
“I also have a concern over where the money is coming from to pay for this since I do not recall seeing a budget line item in 2023,” he said before the meeting. “(It’s) also a concern that it never went out to bid.”
At the March 13 meeting, he addressed Assistant Town Solicitor Dylan Conley.
“For Mr. Conley, I know under state law and our town charter, they’re supposed to be going out to bid for items like this,” Civetti said. “It sounds like he tried to solicit some prices, but we didn’t do a public advertisement.”
“It’s my understanding that this is a specific type of service, which depending on the quality of respondents, the availability of respondents, that the appropriate bid procedure has been followed in this case,” Conley replied.
“Even though we didn’t go to public advertisement?” Civetti asked.
“I believe we (attempted) to solicit bids from multiple agencies,” Conley explained. “We received two responsive bids, was the description I heard from the finance director. One was deemed to be nonresponsive because of their desire to sub it out to a third party. So this is the recommended bid winner.”
Civetti then addressed Chiodo.
“What prompted this study?” he asked.
“As you know, we’ve been up and down with financial operations, and I think both the superintendent, the mayor and I would like to get a grip on the baseline of where we’re at,” Chiodo answered. “Where we’re at and where we’re going.”
Town audit forthcoming?
“Now, is there any attempt to look at any departments in the town?” asked Civetti, an accountant by trade. He provided a few numbers.
“Because I think if we look … at the past five-year history … the school department’s budget has grown by 3.67 percent, where the town’s general fund budget has grown by 15.6 percent,” Civetti said. “And likewise … during that same period the school overspent their expenses $4.7 million, and the town’s general fund overspent their expenses by $7.1 million. I’d like to have the whole thing looked at; not just the school department.”
Civetti argued that the town’s overspending has far eclipsed the schools’.
“I’ll defer to Mr. Conley, but when a budget is passed and approved by the Town Council, I think it authorizes the town to spend a certain amount within that budget,” Civetti argued. “But as I said, the town over the past five years overspent its budget by $7.1 million, which is a little less than double, probably about 70 percent of what the schools overspent their budget. But as we all know, unfortunately, the school doesn’t have an ability to raise cash, so if they’re overspending they can’t be coming up with additional fees to cover their deficits, whereas the town obviously generates significantly more revenue.”
Hearing from the hired experts
Dean Kaplan, Managing Director and Engagement Manager for PFM, addressed Town Council.
“As you know, school districts and towns have a little bit of overlap … obviously both have a very large proportion of their expenditures in personnel, including both the salaries and benefits … schools also have a number of specific areas that we take a look at, including … transportation, food service,” Kaplan said, mentioning the segments of the school budget his firm will examine.
PFM will also audit the district’s special education spending, and revenue streams from the state and federal government.
He said PFM will “get together with the district and with the town” and “go through those different sources, both on the revenues side and expenditures on that side.” They’ll “take a look at … what recent trends are and what’s going to be happening in the future.”
“In particular, right now, most governments on the school side are facing an end to pandemic relief funds in September of 2024,” Kaplan explained. “So people should be prepared for that going away, similar to what you’re seeing on the town side, with ARPA (American Rescue Plan Act) funding … Look at some different areas where perhaps the town and the school district can collaborate and cooperate to try to moderate expenditure increases over time and make sure you continue to have robust revenues.”
Town Council President Robert V. Russo asked about the audit procedure timeline.
Kaplan said the timeline was originally set for three to four months, “but we’re aware that we’re heading toward the end of the fiscal year, you want to put together your budgets, so we’re going to try to get as much done … as early as we can.”
Before this month’s meeting, Russo called the hiring of a firm to examine the school’s finances a “great idea.”
“I think the mayor wants to start with a clean slate as to the school department to learn where improvements can be made to assure that any increased funding is objectively justified for the benefit of the taxpayer and for the staff and students to that the correct amount of funding is provided to the areas identified through the audit,” Russo wrote via email. “The comprehensive examination is geared toward the districtwide operations of the school department and the actual financing needed to run the system in the best interest of the students and community.”
Russo called the $60,000 fee for the comprehensive audit a good deal for the town, “which considering the overall expense to run the school department is reasonable.”
Town Council ultimately approved the contract with PFM, voting 4-1 (Civetti voted against it, saying the audit should be much larger in scope and examine the town’s finances as well as the school’s).
Polisena and Turner did not attend the Town Council meeting. Polisena has not attended a monthly Town Council meeting since his inauguration in January.