Marty Gordon
[email protected]
An outside consultant has informed Montgomery County officials there’s no money that was lost, misplaced or misused when examining the recent problem of the school division spending over its last fiscal year budget.
Instead, it came down to operating practices.
In June, the school board admitted it has overspent its current budget for Fiscal Year 2025-26. According to the county, they were made aware by Montgomery County Public School (MCPS) staff members that the schools had exceeded their legal spending authority by more than $4 million of the $158.4 million appropriated. As a result, the Montgomery County Board of Supervisors allocated emergency monies to cover the amount in the red.
During a joint meeting last week with school board, supervisors learned the results of an audit on the overage and how it happened.
MCPS Superintendent Dr. Kelly Guempel said an outside consultant, former county administrator Craig Meadows, conducted the investigation into the incident. Interviews took place over three weeks with as many as 15 school staffers.
Meadows’ findings included possible causes of what happened. According to Guempel, this included not having formal budget monitoring protocol for the school system and not having proper structure within the finance department.
“Leadership in finance has experienced turnover over the past two years in both the director and assistant director positions. Additionally, the payroll supervisor and purchasing manager are new to their jobs,” Guempel said the report cited.
In addition, the report said the current school finance department is unusually small for a division of this size and their problems with communication.
“Periodic communication between MCPS finance and the county regarding expenditures versus approved budget appear to have been lacking as an overall safeguard,” Meadows’ findings said.
“There was not a clear understanding expressed regarding exceeding the budgetary
appropriation and the timelines required to address any forecasted overage. There was a high focus on revenues equaling expenses, however, the appropriation ceiling did not appear to be fully understood. The need to request supplemental appropriation from the
county due to the approaching end of the fiscal year did not appear to be recognized,” the report said.
The following four recommendations were made:
Implementation of budget monitoring protocols. Monitoring key metrics along with associated protocols and reporting of the annual operating budget on a monthly basis to the Superintendent, School Board, and County should be standard operating. The establishment of a financial dashboard that tracks key metrics and financial thresholds will allow for at-a-glance monitoring and provide a mechanism for a deep dive into areas of concern. Budgetary reports should be provided to each department leader on a monthly basis, as well as regular reviews and status updates.
Restructuring of the Finance Department – The Director and Assistant Director of
Finance are currently responsible for significant day-to-day operational responsibilities that are preventative of “big picture” focus and oversight. The finance department should be restructured to add the staff positions of Accountant and Budget Analyst. These need to be added for a division of this size for effective fiscal management. The positions would be responsible for ensuring that accounting operations are in compliance with generally accepted accounting principles, and the development, analysis, and distribution of monthly financial reports.
Professional education – Key leadership in the MCPS finance department should
attend the Virginia School Board Association and Virginia Government Finance Officers Association seminars and events that provide training and updates related to Virginia school finance issues. These important training opportunities and associations should be standard operating procedures in terms of providing effective professional development for the finance department.
Establish regular meetings for review of financial information – Regular financial
reviews that take place throughout the organization in order to establish ongoing accountability and oversight should be established. The leadership cabinet must be trained to understand the expectations of the review process, and what consequences may occur if the expectations are not followed. Monthly meetings dedicated to account reviews with each director to review their departmental budgets – these should also extend to the Assistant Superintendent, Director of Operations as well as the Superintendent. More in-depth meetings should take place on a quarterly basis to review trends and expectations for the remainder of the fiscal year and to ensure the system’s funding appropriation from the county does not require additional supplemental appropriation.
“None of his findings indicate issues of malfeasants nor a direct attempt to conceal the issues. Rather, oversight appears to be due to a lack of knowledge of fundamental public school account regulations and with the statutory regulations within the finance office as well as inadequate forecasting structure and associated practices. There’s no money that was lost, misplaced or misused. All money is and has been accounted for and was spent appropriately in support of students and staff. This was an issue associated with forecasting and communication and not an issue of fraud,” Guempel said in continuing to refer to the report’s findings.
The schools did freeze six essential positions during the budget problem. The director of finance position also remains open for the school system and is currently being advertised.
“Trevor Bennett, Acting Director of Finance, has been working with the finance staff from the county as we have transitioned to the FY 2026-2027 fiscal year,” said the superintendent. “They have worked together to develop a repayment plan to cover what the county provided to us that we are following and the remaining grant money has continued to come in.” “Our finance staff have already begun installing many of the items listed above, as we await the appointment of a new Director of Finance,” he said.
“In order to have a full idea of where the division’s finances and financial department needs are – we are working to employ an outside company to conduct a full fiscal audit of all financial operations. As the new Superintendent of Montgomery County Public Schools, I want to ensure that all of our practices are fiscally sound, and that our procedures and the
structure of our finance department are optimum for a school division of this size and scope and good stewards of tax pay money,” Guempel concluded.
The school system anticipates this full audit to begin in the coming weeks or as soon as we can secure a contract with the audit company.
