Wednesday, October 12, 2016

Parma Admits $9 Million Clerical Error in School District Budget, Says It Doesn't Affect Bottom Line, Announces Internal Audit Anyway

Posted By on Wed, Oct 12, 2016 at 9:23 AM

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Update: The Parma school district conducted a short press conference earlier this afternoon and released a statement on the $9 million clerical error in the 2016-2017 budget discovered by a Parma parent. (See full explanation of that below in the original post.)

Basically, Parma admitted the error, credited the parent for finding it, announced that it had no impact on the district's financial bottom line, and nevertheless said they'd call for an internal audit. So, not a whole lot of clarity, but here it is:

At the September 26, 2016 Board of Education Meeting, the Parma Board of Education approved the 2016-2017 budget of approximately $143,000,000. The $143,000,000 was distributed throughout the Districtʼs general fund operations budgetary accounts.

It was widely circulated on social media about a large budget item being inaccurate. The parents who brought this to the districtʼs attention were correct. However, this variance in one line item does not impact the $143,000,000 appropriation in total. The district still has a $7,000,000 shortfall that must be addressed this year.

Our current budget of $143,000,000 already represents a $10,000,000 reduction from the previous year.

Of that $10,000,000 reduction, approximately $3,000,000 was recognized through attrition and nonrenewal of contracts. Approximately $3,800,000 has already been implemented as a part of the deficit recovery plan with an additional $3,200,000 in cost reductions still forthcoming.


Buried in the 266-page five-year forecast for the Parma City School District submitted to the state last May by new PCSD treasurer David Crowley was a $9 million clerical error, it looks like. The school district, as you may know, is in the midst of heated debates and parental pushback as drastic cuts have been proposed to answer a $7 million deficit this year and a projected $8 million deficit next year.

Here's how it was found.

Line 4.030 accounts for treasurer and audit fees. As submitted, it called for $10.2 million. 

Parma parent Amanda Marie Karpus printed out the entire 266-page document in late September and went over it with her husband at the dining room table. They highlighted Line 4.030. Earlier this week, she asked about it at the school board meeting. No one had a good answer for her. Why that much?

There was no good answer, it appears, because it was wrong.

In a Facebook Live video posted last night to the Parents for Parma Education page (you'll only be able to view it if you belong to the group), Karpus explained she was told by the district yesterday that the number should have been $1.2 million. 

In other words, a $9 million clerical error.

What does that mean? First, the district needs to confirm the information. Then, hopefully, it means that Parma schools are in far, far less dire financial shape than they were alleged to have been. The school district is reportedly set to issue a statement at some point this week. There aren't many more answers than that at this point. Where does the unallocated money go? Are there other errors? (You won't be able to look for yourself right now: the budget has been pulled offline.)

A call to current school board president Lynn Halloran was not returned this morning.

A call to current treasurer David Crowley was not returned this morning.

This all began with Crowley back in the spring, it's worth noting. The new treasurer arrived and told the board that the district's financial prognosis was not good and that the former treasurer, Dan Bowman, had something to do with that.

"As our new Treasurer delves into our finances, we have become aware that our financial status is not reflective of what we were told by our former Treasurer," former Parma Board of Education president Kathleen Petro wrote to parents on May 31. "The lack of consolidation savings, the 1 to 1 technology costs, the over-estimating of revenues and underestimating of expenditures have had a devastating impact on our district's financial picture."

Incidentally, Karpus, the parent who discovered the clerical error in Crowley's submitted forecast, reached out to Bowman, now treasurer of the Perkins local school district. He said there's no budget line that would support that $10.2 million number.

We'll keep you updated as this unfolds.

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