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MetroWest Daily News - Audit criticizes schools nonprofit
By David Riley/Daily News staff - 4/16/2010

Criticizing spending by a nonprofit that provides special education and other services to several MetroWest school districts, State Auditor Joe DeNucci yesterday vowed to take a closer look at the books for similar organizations in Massachusetts.

"The education collaboratives are not being held to the same performance standards that apply to the public school districts and the charter schools," he said.

DeNucci released an audit report yesterday saying The Education Cooperative based in Dedham may have charged excessive fees, made questionable financial decisions and sometimes failed to use properly licensed staff during a 2.5-year period.

The report points to $59,267 in "questionable" expenditures on food, alcohol and meeting expenses for a superintendents' retreat on Cape Cod and a $1.4 million budget surplus built up as the districts it serves face budget cuts, among other concerns.

Nancy Sullivan, who became the cooperative's executive director after the audit period, called the audit a "positive process." While her organization disagreed with some findings, other recommendations can help the organization improve, she said.

Sullivan stressed she believes the cooperative ultimately saves school districts millions of dollars.

"We're not in it to make money," she said. "We're in it to be of service."

The Education Cooperative has 16 member districts, including Framingham, Holliston, Hopkinton, Natick, Wayland, Dover, Sherborn and Dover-Sherborn Regional schools. The nonprofit also serves Canton, Dedham, Medfield, Needham, Norwood, Walpole, Wellesley and Westwood.

Founded in 1974, the cooperative provides special education, two alternative schools, professional development, grant programs and collective purchasing for schools. Districts pay a fee or tuition for services rather than providing them in-house. There are about 30 such organizations in the state.

The audit looked at spending from July 2006 to February 2009.

DeNucci's report questions if the cooperative overcharged for services because it built up a $1.4 million surplus over the audit period, running contrary to legal restrictions that limit government fees from exceeding the actual cost of services.

The audit also criticizes compensation for now-retired Executive Director John P. Connolly, whose $154,157-a-year salary exceeds those at larger education collaboratives, the report says.

On top of that, he received an annuity totaling $77,111 during that time to supplement his pay, and authorized paying himself $44,520 over that audit period to cover his share of retirement health insurance through a previous employer.

The report also takes aim at an unbudgeted $125,832 spent on consultants and legislative lobbying. Some staff at The Education Cooperative also did not have proper licensing, the audit said.

"I never went into this business just to be a critic," DeNucci said. "I wanted to be sure that our audits have recommendations that make government better - in this case, make schooling and the collaboratives better."

In the audit, The Education Cooperative responded that it compensated Connolly according to his 30-plus years of experience as a superintendent in New York and Texas.

Sullivan's organization also disputed the claim about staff lacking proper licenses, saying any employees lacking certification had required waivers.

"My teachers are certified and we comply with all regulations of the department," Sullivan said.

Glenn Briere, a spokesman for DeNucci, said his office stands by its finding.

Sullivan also said she did not believe the organization paid for alcohol on a once-a-year Cape retreat, another point on which the auditor disagreed.

In the audit, the cooperative said the $1.4 million surplus was unusually high, but the use of its services can be sporadic - the collaborative faces a shortfall of $400,000 this fiscal year. Rates are set about 18 months in advance, and are kept level or dropped after years of surplus, Sullivan said.

She said the organization has updated its procedures since the audit. "It's given us a chance to basically look at the organization and our internal controls, and to be sure we can tighten them up," she said.

Overall, DeNucci said the state Department of Elementary and Secondary Education is not adequately monitoring collaboratives, and he plans to look at others statewide.

He has until next fall to do so - DeNucci is not seeking re-election. Mary Connaughton of Framingham and Worcester County Sheriff Guy Glodis are among the candidates for his seat.

In response, the Department of Elementary and Secondary Education forwarded the Daily News a letter from Commissioner Mitchell Chester saying he agrees the department needs to update 22-year-old policies on monitoring collaboratives.

An internal review is under way, Chester wrote.