BOCES financials put school districts in a tough spot
State is reviewing issues, but education service provider's board has most of the control
October 18, 2009
The recent financial struggles of the Northwest Colorado Board of Cooperative Educational Services raise the question: How does a BOCES work?
BOCES operate much like school districts in that they appoint boards of directors, made up of a representative from each school district’s board, said John Condie, performance support manager for the Colorado Department of Education. Condie, who serves as the liaison for school districts on the Western Slope and Pikes Peak area, said they also submit annual independent audits to the state by Dec. 31. But they’re not accredited, as school districts are required to be.
That board of directors, he said, reviews the audit before it’s sent to the state. Last year’s audit didn’t catch anything indicating that BOCES would overspend by nearly $317,000. So the board didn’t, either.
That seems to explain why BOCES board President Brian Hoza said at a meeting last week in Granby that it was unclear how BOCES found itself in this position. That position also includes BOCES’ increasing assessments of its member districts last month by more than $481,000 after the initial assessments were presented in May.
BOCES also owes the districts more than $777,000 in title funding and has said it will make those payments after settling last year’s overspending.
BOCES’ funding comes from its member districts. Other federal funding for state-mandated special education services also is provided. The state distributes that federal funding.
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The increased assessments made things tense with the districts, which include Steamboat Springs, Hayden and South Routt, because their budgets have very little wiggle room for additional expenditures. The budgets are set pending final approval in January.
How they got started
A year after the Boards of Cooperative Services Act of 1965 passed in Colorado, 14 school districts in the San Luis Valley joined to form the first BOCES. Now, 21 BOCES statewide share state-mandated special education services and provide other education-related services.
The Northwest Colorado BOCES started as the Child Study Center in 1967 with three districts. The current six districts have been a part of it for as long as Executive Director Jane Toothaker, who joined BOCES in 1982, can remember.
BOCES provides state-mandated special education services for the districts. It also offers a number of additional services. For instance, it operates the Yampa Valley School, an alternative school; runs the South Routt Preschool; and provides professional development.
It also provides teachers’ aides, preschool teachers, psychologists and physical and occupational therapists.
Condie said a BOCES board is its primary governing body and that the Department of Education would step in only when a concern came up. He said that could occur after the board or the BOCES executive director requested a closer review. Or the Department of Education could choose to step in, Condie said.
That has happened. Toothaker said three Department of Education representatives met with her Friday. She said they requested financial information, including bank statements, receipts and expenditure reports. The department will submit some information back to BOCES this week, Toothaker said.
“It wasn’t really an audit,” she said. “It was more of a fact-finding trip for them.”
Vody Herrmann, the assistant commissioner of public school finance for the Department of Education, said during those visits, the agency would review a BOCES’ internal controls for accounting. That includes revenue and expenditures, cash management and whether BOCES was in compliance with state and federal regulations. A review also would probably include an explanation about what happened.
She said a review could have several outcomes, such as a BOCES returning federal funding if it was used improperly, but it depends. Ultimately, Herrmann said, oversight of BOCES falls to its superintendents and board.
“The responsibility of the BOCES are truly its member districts,” Herrmann said. “They own that BOCES. They own its assets. It’s an entity formed by those members.”
In the case of the Northwest Colorado BOCES, Herrmann said the Department of Education’s plan of action would depend on its findings, which is what it will present to Toothaker.
Toothaker said BOCES presented the changes it’s already made to the Department of Education representatives. Those include hiring a new finance director, changing how it is auditing funds internally, being more open and transparent about its budget process and getting more input from the superintendents and board.
In the meantime, Toothaker has proposed using $273,000 in federal stimulus funding to help pay for last year’s overspending. The remainder would come from a $44,000 contribution from Steamboat, Hayden and South Routt for services BOCES provides for the Day Treatment program for at-risk students.
The superintendents also met with Toothaker on Wednesday to discuss their preference that BOCES cut the entire $481,000 in increased assessments from its 2009-10 budget. Last week at the BOCES board meeting, board members directed Toothaker to start making cuts based on recommendations from the superintendents.
Toothaker said that didn’t happen because she and the superintendents still were reviewing possible staff cuts, in relation to contracts. She said she and the superintendents could decide on cuts such as benefit reductions and eliminating contingencies in funds when they meet again Tuesday.
South Routt Superintendent Scott Mader said he feels better about the BOCES financial situation after Wednesday’s meeting but thought things would have moved faster.
“I would have thought by now we would have more work done on it,” he said. “It’s been slower than I thought because it’s more complicated than I thought.”
Toothaker said she hopes to have cuts implemented by Oct. 28, the next BOCES board meeting, which will be in Steamboat.
“We definitely need to get moving ahead,” she said. And she hopes to have a revised budget to present to board members at the Nov. 12 meeting in Hayden.
“It’s a necessity that it gets done because every day that we move forward is a day we’re spending at who knows what rate,” Mader said. “That’s a must in my mind.”