An $18 million budget shortfall suffered by Brockton Public Schools was the result of mismanagement and overspending, but no fraud, theft or other criminal acts, according to a report detailing an independent investigation into the city’s financial woes released Tuesday.
The Brockton Public Schools budget shortfall came to light in August 2023 it was just before the new school year began and came as a shock to parents and the public, who were frustrated by the appearance of officials being caught off-guard with the issue. An independent review blamed poor money management and oversight, finding that the district failed to record, track and approve spending.
The city commissioned a full investigation by law firm of Nystrom, Beckman & Paris into what went wrong. The 179-page report, released Tuesday, found fault in everything from the superintendent to the school finance department to the school committee and the city itself.
“At their core, the areas of overspending were caused by structural failures, a lack of sound budgeting and financial analysis, a failure to track spending relative to the budget and leadership miscues throughout the school department and the city," City Solicitor Megan Bridges said at a press conference Tuesday. She also noted they would be forwarding a copy of the report to the Public Corruption Division of the Attorney General's office and Office of the Inspector General.
"We will be reviewing the findings of the investigation commissioned by Mayor Robert Sullivan and the City of Brockton, and made public today, into the facts and circumstances regarding the Brockton Public Schools' Fiscal Year 2023 budget deficit," the district said in a statement Tuesday afternoon.
The Brockton School Committee discussed the findings at a special meeting at 7:30 p.m. Tuesday.
Read the full report at the bottom of this article.
The deficit, according to the investigation, came down to overspending in three major areas — employee salaries, transportation; and out-of-district tuition. The investigators found that no money was missing and no evidence of fraud, theft or other criminal action.
The city of Brockton has a history of financial mismanagement. As recently as 2020, the Massachusetts Department of Elementary and Secondary Education (“DESE”) was involved with the school district, finding major budgeting issues and recommending changes. However, the report found that the guidance provided was not well-followed. For example, in 2020 DESE pointed out that the Brockton Public Schools budget did not include actual expenditures for previous years’ expenses, information that should be used to help predict and guide a budget. Yet the budgets presented for 2021, 2022 and 2023 were all found to be missing the same data, according to the report.
The report also found that for 2023, the budget presented to the school committee was not specific and even missing left millions of dollars of expenses out, including over 200 staff positions. The school committee, according to the report, also made little effort to oversee the financial health of the district, despite their obligation to do so, perhaps due to a lack of understanding on financial management.
Also among the issues, according to the report was a lack of financial understanding by Superintendent Michael Thomas, who described himself as "not a numbers guy" and relied on the school’s finance department to guide spending despite his legal responsibility to guide it. According to the report:
“Thomas claimed that his focus was all about the students, which is laudatory, but his leadership was guided by gut instinct, force of personality, and a commitment to people who viewed the world his way and did not question his decision making. With no tolerance for dissent, Thomas led with an ‘iron fist’ and made spending decisions regardless of cost, existing policies, or good business judgment.”
Thomas took responsibility for the shortfall, but swore the money was all spent on the kids.
The finance department was overseen by Chief Financial Officer Aldo Petronio, who was described in the report as a longtime veteran employee of the city, a friend of Thomas and well-liked. However, according to the document, “Petronio’s financial practices, business skills and methods were substandard, antiquated and lacked transparency.” Petronio, who was placed on administrative leave when the issues first came to light, was responsible for the creation of the budget that would then be presented to the school committee. His department was also meant to manage and track the finances of the district.
The district’s deputy financial officer, Chris Correia, was identified as being the first person to realize the district was headed toward a financial crisis, in March 2023. However by then, it was too late to correct, despite efforts instituted like a hiring freeze, cutting overtime, and putting an end to discretionary spending. The report suggests that the actions taken were not enough.
“Between March and August 2023, Thomas, Petronio, Correia, City CFO Clarkson, and the Mayor ignored clear warning signs that showed BPS was going to end FY23 with a significant deficit,” the report reads.
Correia has filed a lawsuit against the city of Brockton, claiming that he reported concerns of a potential financial crisis to his supervisors and city officials but they went unanswered, and that he is now being retaliated against for being a whistleblower. That case is ongoing.
The report also highlighted other issues that contributed to the crisis, including a breakdown in communication between the school department and the city, despite the city CFO also having a legal responsibility in school spending. Investigators also found that the 2023 budget input into software meant to track expenses, called Munis, did not match the budget presented to the school committee.
The report presented recommendations to avoid future issues. These include, but are not limited to:
- Building a budget based on actual expenses from prior years
- A more detailed and transparent budget
- A human resources/personnel system that accurately tracks employees by location, position, and funding sources
- Tracking spending relative to the budget approved by the school committee
- Annual budget and finance training or school committee members
- Finding a superintendent with a financial background and prior experience managing large organizations
In a press conference Tuesday, Mayor Robert Sullivan said some of the guidance in the report has already been taken as they work to correct the financial path of the school department in the future. He also recommended merging the school district's financial operations with that of the city.
