Principal Discretionary Accounts Closed, No Fraud Alleged

At Monday night’s Wayland School Committee meeting, members addressed concerns and questions related to the Principal’s Discretionary Funds and brought to the forefront by the recent draft of the Abrahams Report.

The funds in question, one at each of Wayland’s five schools, were pointed out as violations of Massachusetts General Law 71:47 on page 17 of the Abrahams Report.
That law, according to the report, allows for individual schools to maintain “student activity bank accounts but no other bank accounts are allowed as all funds of any entity/department of the municipality must be in bank accounts under the custody of the Treasurer.”

All of these accounts have been closed on the recommendation of Wayland Town Counsel Mark Lanza, said School Business Administrator Geoff McDonald.

School Committee Chair Louis Jurist explained to the committee and the members of the public in attendance that these accounts have been in place since the 1990s when they were permitted by Massachusetts law and were “pretty widespread in their use throughout Massachusetts.”

The accounts, Jurist explained, were primarily designed to provide principals access to funds collected for teachers’ retirements and activities and as a pass-through account where funds raised through booster and PTO activities could be used to pay for student activities such as trips. The PTO president and treasurer, Jurist said, have always reviewed the PTO portion of these accounts.

In total, the discretionary accounts held about $140,000 when they were closed. That money was divided with about 68 percent going to a student activity account, 27 percent going to a gift account, and about 5 percent going to a lost book account. All of the money is now in the hands of the town treasurer.

Only about $3,000 to $4,000 of each account was for the principal to use, Jurist said. The rest of the money in each account comprised the so-called “pass-through” funds.

“It is pretty clear now that there were never any taxpayer generated funds going to this [account],” Jurist said, adding that the sole exception found to-date was a wrestling tournament fee that needed to be paid immediately and that was refunded soon thereafter.

Committee member Shawn Kinney, who has been vocal in his criticism of financial controls within the school system and who contacted Lanza with his concerns, said he had looked through the books for these accounts and found nothing that indicated they were used inappropriately.

“I don’t see any evidence of fraud in these accounts at all,” Kinney said. “I’m just saying there was a lack of controls, and we owe it … to go in and review the books and go on from there.”
Committee members agreed the books needed to be reviewed and said that process has already started.

While these particular accounts are no longer permissible, the School Committee is looking at an appropriate way to make a set amount of PTO funds available to principals on short notice.

Currently, principals from all five schools are limited to receipts of no more than $10,000 in the allowable student checking accounts, but McDonald acknowledged that the middle and high schools have a greater number of expenses so their accounts should likely be capped at a different level than the other district schools. Currently, none of the individual school accounts has been replenished.

Committee members have postponed further discussing this issue pending recommendations from the Operational Review Committee once it completes its assessment of the Abrahams Report.