A new audit finds that the finances of Metro Nashville Public Schools were not as unusual last year as some critics feared. Officials had requested an investigation into the district’s travel expenses, the salaries of central office staff, changes to vendor contracts and overall adherence to budget constraints.

A shortfall triggered two members of the school board and one councilman to seek the information. Of particular interest was whether warning signs were missed and whether several types of spending have ballooned under Director of Schools Shawn Joseph.

But auditors found that overall spending wasn’t unusually far off from what was budgeted. Travel costs were lower in fiscal year 2018 than the two prior years and under budget by $769,863.

“This past budget year, we addressed budget constraints by freezing out-of-town travel to ensure dollars were not expended on travel that was not a necessity,” district spokeswoman Dawn Rutledge told WPLN in an email. 

Staff count and salaries in the central office were found to have increased — more than $3 million compared to 2016.

However, School Board Chairwoman Anna Shepherd said the district headquarters may actually be understaffed and overworked. She found the audit mostly reassuring.

“I was happy to see there was nothing egregious — nothing criminal. I didn’t think that there would be. But the best way to allay suspicions and fears is to shine a light on something,” Shepherd told WPLN. “I see some trends where we have come down in expenses. I’ve seen some trends where we’ve gone up. And some where we’ve stayed the same.”

Shepherd said she will be looking closer at the district’s contracts with vendors — some of which are seeing rising costs. The audit presents the costs of more than 75 contracts over the past three years.

“Typically, any increases in contract costs are consistent with the increases in the market and any growth in services provided,” said Rutledge, with the district.

Some Answers Elusive

The audit couldn’t reach a verdict on one key question from officials: whether the district could have realized sooner that its enrollment — and therefore state funding — was on the decline. Where the schools expected a 1 percent enrollment increase, they ultimately saw a 1 percent decrease.

Auditors wouldn’t say when officials “should have known.” They report that while state funding estimates were being monitored in spring 2017, that those estimates could have “continued to fluctuate” until at least January 2018 — and that enrollment counts as late as fall 2017 weight heavily into the funding calculation.

On this front, Shepherd said the district can do better.

“And we should. And I feel quite sure that we will be from now on,” she said.

The new report also provides a neutral description of two other allegations that had swirled among officials:

• Regarding a $12 million clerical error, the auditor clarifies that the figure was incorrect in a presentation, but that there was never an accounting error of that magnitude.
• Auditors could not find evidence of school principals being threatened with potential withheld funds — and point out that a hiring and spending freeze was instituted in March 2018 on certain items, and that some exceptions to the freeze were allowed.

The full audit is online here:
MNPS Financial Matters.

For its part, the district says it plans to act on two formal recommendations, both of which deal with how it can clarify the tracking of central office spending. Rutledge said the district was pleased, but not surprised, by the outcome of the audit.

“The audit affirms that the district is managing finances responsibly,” she wrote.

Shepherd said the budget still needs to be monitored closely, as she and other officials expect “another really slim budget” in the coming year.

“So we really need to start talking about that very soon,” she said.