Brockton shares findings of independent audit after $18.3 million deficit in 2023 school budget

BROCKTON, Mass. — The City of Brockton released the findings from a third-party reviewer report on Friday afternoon detailing the school district’s budget after an $18.3 million deficit in the 2023 budget.

Open Architects, the auditor responsible for the report, says the fiscal year 2023′s budget deficit came as a result of costs associated with transportation, special education services and select employee benefits.

According to the report, Brockton Public Schools (BPS) never created a proper budget to account for the full cost of transportation services, including owning, running, and maintaining a transportation fleet and associated operations. The study found that the district’s financial system record, Munis, contributed to much of the poor budgeting because it was not properly used to record approved budgets, track school and department budgets, and oversee significant expenditures.

Officials reportedly pooled 80% of the 2023 budget ($174 million out of a $219 million General Fund budget) in a single account rainy day fund called “Fund 199.” This fund was used to transfer money when problems arose without any oversight or approvals.

For the 2024 budget, district officials allocated $11.2 million for transportation services. As of January 31, BPS has spent 95% of that budget and is on pace to spend $22.5 million on transportation costs.

Similarly, the audit claims a budget was never properly created for special education services across the district. The largest costs came from out-of-district placement tuition costs (nearly $3 million) and the liability for over 58,000 hours of unmet service needs for students, costing almost $1 million.

Lastly, Open Architects identified large deficits with worker contracts, specifically employee incentives and collective bargaining agreements that weren’t properly budgeted.

A health insurance stipend for employees to keep up with premium increases to Blue Cross Blue Shield and Harvard Pilgrim health insurance plans increased every year. Unused sick and vacation days being bought back by workers also directly cost the district over $1.5 million.

The audit also identified over 130 employees with individual contracts that allow for personalized benefits like collecting overtime. It’s unclear how much of a deficit that caused the district.

“What this report makes clear is that, while there are numerous significant and growing costs associated with providing students with a holistic education, we have not done a good enough job to plan for and mitigate those costs, nor have we taken enough care to adhere to budgeting best practices,” Acting Superintendent James Cobbs said.

As of February 2024, the third-party reviewer found it is “unlikely” that the school district will achieve a balanced budget. BPS is on pace to confront a $19-25 million deficit, despite $15 million in one-time funding sources.

Beyond this year, Open Architect says BPS will also face a $7-19 million in 2025 if changes aren’t made.

As for the city, the auditor says more funding is needed to help close the current fiscal year with a deficit, and that at least $20 million additional funds will need to be identified to balance the 2025 budget.

“Like with any of the challenges facing our city and our schools, there’s no one-size-fits-all solution,” Acting Superintendent Cobbs said. “However, this report provides us with critical insight into where we’ve gone wrong and a roadmap for improving our processes. It also affords us the opportunity to identify strategic spending reductions we can make in the short term to avoid a dramatic deficit this fiscal year while ensuring that students do not suffer as a result of these fiscal challenges.”

The full audit can be found below:

This is a developing story. Check back for updates as more information becomes available.

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