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State audit details how RCSD overspent $40 million

Apr 27, 2020

About six years ago, Rochester’s Board of Education received a presentation from former Superintendent Bolgen Vargas, and then-Chief Financial Officer William Ansbrow. 

Ansbrow said: “If ‘this’ continues, the district’s finances will hit rock bottom within three to five years.” 

Deputy State Comptroller Elliot Auerbach said last week that “this” includes atypical accounting practices. And he said it continued for at least five more years.

What future deficits are projected for the Rochester City School District.
Credit NYS Comptroller's Audit of the Rochester City School District

“Here are the facts,” said Auerbach. “Here are the numbers that the district was clearly given at some time during the course of budget decisions but chose to ignore."

An state audit released this month said some of those practices include using negative numbers, which make the budget appear balanced on paper when it's not.

The district also “severely” under-budgeted major costs like substitute teachers, which Auerbach said were used to avoid hiring full-time teachers. He said the district used its savings account to pay for costs like those until they ran out of money this school year.

“That was the biggest number right there,” said Auerbach. “But it went right down the line, substitute teachers, retirement, BOCES, and it just compounded the matter and it came close to $40-plus million.”

During a budget hearing Friday, Councilman Michael Patterson pressed district leadership, including Chief Financial Officer Robert Franklin, on how this could happen. 

Franklin, who joined the district in November after Everton Sewell resigned from the position in October, said the district continues to use negative numbers.

“It's just kind of how the budget works in the district,” said Franklin. He also said he’s taking a “thoughtful” and “methodical approach” to how they are used. 

“If you have a process that no other school district follows for their budgeting, and it is seen as challenging by the state auditors looking at it, why would you continue that process?” Patterson asked.

Board President Van White White said they’re reviewing the process and intend to make changes.

“We wouldn’t want to continue a practice that’s not effective,” White said.

But he said the board's focus now is on balancing the next year’s budget, which is short $87 million.

The comptroller’s report faulted district management for the atypical practices, not rank-and-file staff. Franklin said he and the current budget director are operating with “a little more integrity.” 

“We promised this team that this board will have a balanced and honest budget presented to them,” said Franklin. “We will not indiscriminately shortchange any of our appropriations in this budget.”

Franklin also said past administrations and his predecessors avoided hard decisions.

“Significant dollars had to be cut from our budget, and they didn’t know how to do it,” said Franklin. “And time had run out. So they indiscriminately reduced a number of items. And thought they could figure it out later, and of course, later never happened.”

As a result, the district had to lay off more than 150 people in December. The district received a 30-year loan from the state to pay the rest of the debt.

In exchange, a state monitor will oversee the district’s finances for the next three years. The state comptroller’s office will issue a report on this year’s budget.