For Immediate Release - August 31, 2011

Auditor Bump Calls for Broad Reform of Education Collaboratives

Audits find lack of oversight, governance issues, abuse of public funds

(BOSTON, MA) –Citing audit findings that reveal widespread problems with education collaboratives, State Auditor Suzanne M. Bump today called for broad-based reforms to address mismanagement and improper spending as well as to improve state and local oversight of the Commonwealth’s 30 education collaboratives.

Auditor Bump said the reforms, which include legislative and regulatory changes, are necessary steps to ensure collaboratives operate to the highest standards in delivering regional educational services for member school districts and thousands of special needs students.

“The pervasive deficiencies we have seen in this small sampling of the 30 different collaboratives lead us to conclude that this is a broken system,” said Auditor Bump. “These systemic problems put at risk the interests of taxpayers and special needs students, both of whom were supposed to benefit by the creation of these collaboratives.”

A 1974 law authorized two or more school districts to form collaboratives sanctioned by the Department of Elementary and Secondary Education to provide cost-effective educational services, frequently for special needs students. The state’s 30 collaboratives provide services for approximately 8,500 students.

Common Audit Findings
Auditors reviewed the financial operations of the Merrimack (MSEC), READS and Southeastern Massachusetts (SMEC) education collaboratives, which, together, generate more than $31 million in annual revenue and serve 32 single and regional member school districts and their nearly 1,000 special needs students.

The audits, along with previous findings from the EDCO and The Education Collaborative (TEC) audits, found that two or more of the agencies shared mutual problems such as:

  • governance problems, including collaborative board members who also sit on boards of related organizations, raising conflict of interest issues;
  • staff whose participation in the public retirement system has a questionable legal basis;
  • failure to provide appropriately licensed professionals to work with special needs children;
  • the use of collaboratives as keepers of slush funds for member districts;
  • questionable spending on entertainment, staff salaries and benefits;
  • improper retention of accumulated surplus funds from member school districts; and
  • insufficient state and local oversight capacity.

“The disturbing theme running throughout all of our findings of education collaborative audits is they lack governance, accountability and oversight,” said Auditor Bump. “The MSEC audit further highlights the need to expand our statutory authority so we can have better access to the records of contractors and subcontractors.”

Immediate and Long-Range Recommendations
Auditor Bump is recommending that the Department of Elementary and Secondary Education (DESE), lawmakers, oversight agencies and local school officials take immediate and long-range steps to address these issues with collaboratives.

Among the recommendations:

  • the state must clearly define the permissible services that collaboratives should provide;
  • increase DESE’s financial and programmatic monitoring authority;
  • change collaborative board composition and standards to ensure members possess the skills, objectivity and time necessary to ensure proper governance;
  • limit the amount of surplus revenue which may be retained by collaboratives;
  • require financial reporting and auditing for collaboratives akin to that asked of charter schools;
  • enact “follow the money” legislation, H-5, in order that this office has the authority to audit any entity spending public funds;
  • clarify DESE’s authority to effectively oversee and sanction collaboratives; and
  • apply existing state rules regulating related party transactions to collaboratives.

“Parents of special needs students shouldn’t have to worry if their children are getting all the help that was intended with the creation of these regional agencies,” said Auditor Bump. “All of the stakeholders—state and local governments, school officials, families and advocates—must work together to fundamentally change the collaborative system and realize the full potential of service and savings collaboratives can and should provide.”

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