WESTBROOK — The Westbrook School Department has reduced its deficit by $2 million, which is a “significant improvement,” an independent auditor says.

The remaining $1.1 million shortfall is largely based on the timing of ongoing billing and was “expected,” said auditor Christian Smith from financial advising firm Wipfli.

The School Department’s new accounting manager Heather Neal has received credit for her work in reducing the schools’ deficit. Screen shot / Zoom

City Administrator Jerre Bryant said at a School Committee meeting last week that the school department is in a “much better place than last year.” He attributed that in large part to the work of the department’s new accounting manager, Heather Neal.

“That’s greatly appreciated and underscores the need for the resources that were essential and necessary for the proper financial management of the school’s finances,” Bryant said. “We are headed in a very positive direction.”

Bryant’s remarks were in sharp contrast to comments he and other city officials made last year when an audit revealed a $3.5 million school department deficit. Meetings at that time between school and city officials were tense, with Bryant and others saying they had no confidence in the department’s ability to rectify the situation.

Mayor Mike Foley said then that another poor audit could affect the city’s bond rating and make it more difficult and costly for the city to secure loans and manageable interest rates for future projects.

None of its financial books matched the city’s, money to reduce the deficit wasn’t in hand and financial records had to be checked and reworked with heavy collaboration from City Finance Director Suzanne Knight.

Independent auditor Christian Smith says the School Department has done “significant work” in reducing its $3 million deficit. Screen shot / Zoom

School officials, blaming poor bookkeeping for the deficit, argued last year that the amount was closer to $1.1 million.

Smith said the deficit had been about $3 million.

The department’s financial books have been straightened out and plans are in place to reduce the $1.1 million in deficits remaining, he said.

“It is important to note the work that has happened to take care of those deficits,” School Committee Vice Chairperson Sue Salisbury said. “It was a significant issue when we first started and we did a lot of work over this year to take care of those. We have a plan in place to bring down the remainder of the deficits.”

The bulk of the deficit remaining is in the Spring Harbor Hospital, Medicaid and Food Service accounts.

Smith said the food service deficit is expected, and should not be weighed as heavily as other deficits.

“The food service program lost $63,000 for the year, that’s pretty typical,” Smith said. “There are maybe five food service funds in the whole state that are positive. They aren’t intended to make money. Some schools are down $200,000-300,000 a year. It is something to work on, but I also know it’s a challenge to make money in that program when your goal is to provide meals at a low cost.”

School officials say they continue to budget and hold any charges to the Spring Harbor and Medicaid accounts as they naturally replenish from reimbursements.

Previously, the department was billing those accounts for related expenditures but had overlooked the growing deficit. The accounts see income each year, and by cutting spending and rerouting it to other accounts, the deficit will reduce, officials said.

Smith also said that by charging Medicaid billing to the general fund instead of the Medicaid account itself, the school actually will see reimbursement money from the state it has not gotten in previous years.

“By doing that it allows you to get reimbursed by the state of Maine next year, so it was positive by doing that rather than billing it to Medicaid,” Smith said. “Heather Neal found that through the work she was doing, so that increased Medicaid by $240,000 roughly.”

Other deficits include about $100,000 in different grant accounts, however, Smith said that much of those remaining deficits are just due to the timing, so the deficit looks larger than it actually is.

Money going into those accounts are slated for the end of the school year, just after the audit.

It School Department also is working on ways to reduce food service costs.  

“We have made incredible strides. In part, it’s due to capacity. We now have a person dedicated exclusively to overseeing finances,” Superintendent Peter Lancia said.

The new accounting manager Heather Neal was hired as a result of the growing deficit. Prior, the school did not have one particular finance person. Other department members are being updated on regulations and are being trained to prevent similar mistakes in the future.

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