Mayor: Audit Finds School Board Spending Irregularities

Giuliano said BlumShapiro's random probe uncovered serious problems with mileage reimbursements among board officials, which has resulted in a criminal investigation.

Middletown Mayor Sebastian Giuliano told a roomful of reporters this afternoon that an independent audit of school board finances has revealed a series of accounting irregularities — ratcheting up tensions between the mayor's office and the school board.

The mayor also said the BlumShapiro audit — details of which were released at the press conference which included city treasurer Christine Bourne — uncovered problems with mileage reimbursements among board officials, and that the matter is being investigated by police.

“There is enough to get the investigative authorities suspicious and want to delve into it,” Giuliano of the mileage probe. “Right now, it’s local. Could it go beyond that? I don’t know.”

According to the mayor, BlumShapiro also uncovered at least five other instances of irregular accounting practices, in which money was encumbered, or held back.

From June 18, 2010, Bourne said, the last day of school, to June 30, 12 days later, the audit revealed the board had spent $1.2 million rather than return the money to the city.

Questioned about the audit, Superintendent Michael Frechette defended the school board: “First, there was a finding against the city, not the Board of Education in the audit; nothing was against the BOE. Second, what the management letter suggested we implement is what we’ve been doing all along.”

BlumShapiro found that out of 21 purchase orders randomly reviewed, half were deficient, according to the mayor.

“This is not result of a forensic audit,” Giuliano said. “These results are a random examination of the BOE budget and expenditures and purchase orders. As soon as they found something deficient, they stopped.”

The examination revealed, “a lack of transparency and in many cases misfeasance with public resources,” Giuliano said.

Other deficiencies the mayor cited were:

  • Invoices are being produced and paid prior to the issuance of purchase orders.
  • Purchase orders are being increased after final payment for a project or services are complete.
  • Purchase orders are generated using a 99999 code, so the city and public have no idea who and how much is being paid.

“We’re talking about significant dollars that just go into black holes,” the mayor said, “that really don’t benefit the students at all.”

The next step, Giuliano said, is up to the Common Council, “if they want to do a line-by-line audit.”

The next Common Council meeting is May 12 at 7 p.m. in Council Chambers.

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