Budget & Finance

How School Districts Can Avoid Costly Mistakes That Make Auditors Grumble

By Mark Lieberman — October 19, 2023 3 min read
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Howie Barber has served as assistant superintendent of finance and operations for the Old Rochester regional school district in Massachusetts since 2020. Years before he arrived, the district’s finance team made a mistake that led to some misspending of a small amount of state grant dollars.

Barber and his colleagues haven’t repeated the error since. But that mistake haunts him when he’s applying for new grants, Barber said here during a session Thursday at the annual conference of the Association of School Business Officers (ASBO) International.

“Every year, it’s a phone call or an email” from grant providers reminding his district not to make the same mistake again, Barber said.

The story illustrates the long tail district leaders face as auditors swoop in to examine how they spent billions in federal COVID relief aid that’s poured into K-12 schools since the COVID-19 pandemic began.

Any district that spends more than $750,000 in federal money each year will be subject to an audit. Some districts, after receiving the unprecedented sums of federal spending, will likely be encountering an audit of federal funds for the first time.

Auditors thus far haven’t turned up widespread mismanagement of COVID relief dollars in schools. But spending federal dollars prudently requires navigating complex rules, tight schedules, and dense bureaucracies.

Barber’s session highlighted some of the most common mistakes around federal spending and offered tips for avoiding the classic no-nos. Here are a few key takeaways.

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Reach out early and often to your colleagues and constituents

School finance officers sometimes operate in their own silos, with little on-the-ground experience in classrooms and school building leadership. But it’s important for school officials to see with their own eyes how money is being spent, Barber said.

He recommends that finance officers set monthly meetings with school building administrators or grant managers to keep track of how spending on a particular grant is going and what challenges have arisen. Conversations with procurement officers can also help illuminate whether grant funds are going toward the items the grant is meant to cover.

Barber’s regional school district administers grants that several smaller districts also receive, so he keeps in close touch with fellow administrators there as well.

Consider the long-term ramifications of misspending

If a district misappropriates $100,000 out of a $1 million grant, it’ll likely have to pay back that amount to the agency that awarded the grant. But district staff also have to find new funds to cover the cost of whatever they inappropriately spent the money on in the first place.

“You lose twice the amount of money without going through these planning phases,” Barber said. “Any type of small mistake can be extremely costly.”

A district might have followed every grant rule to the letter, but if administrators aren’t documenting those steps as they go, auditors may take issue with even the most scrupulous spending decisions.

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Consistent leadership and institutional knowledge play a big role here, according to Barber. Eight people occupied his role in the 10 years prior to his arrival in the district. “There wasn’t a way of really managing everything, so the documentation wasn’t there,” he said.

Keep elected officials abreast of the latest grant-related developments

Many school boards require administrators to request approval when new grant opportunities come in. But some chief financial officers don’t keep board members updated on how grant spending is going after the money has been awarded.

Later on, if there’s an issue, explaining it will be embarrassing, and there could be long-term ramifications.

“It’s more than an issue of loss of funding,” Barber said. “It’s a loss of respect from your school committee.”

If you move to a new state, don’t assume the rules are the same

Every state has a unique set of policies around financial documentation and procedures for procuring new materials and services, Barber said.

For instance, Massachusetts doesn’t require schools to go through a formal procurement process to secure new services or instructional tools to support students in special education classrooms. But other states do require a formal procurement process for those expenses.

State and federal regulations sometimes differ as well. And all of these policies can change with little warning.


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