A Critique and an Out-of-the-Box Proposal

Thoughts About HCSD and Its Proposed Budget 

by Ken Sheffer

I am commenting on the new Hudson City School District mad cash grab and vote.

67 square miles. 67 million dollars. What could go wrong?  I mean, Washington, D.C. is 68 sq. miles in size and look how bankruptcy is working for them. The HCSD is the 67 sq. mile land  mass I am referring to and it includes Hudson, Claverack, Ghent, Greenport, Livingston, Stockport, and Taghkanic. Still it is just called the HUDSON City School District.  And so, the debate online involves mostly Hudsonians (I think), which is fine. But the debate about educational standards and costs involves all of the towns listed above.  And, it seems, all the news out of the HUDSON District is so negative it surprises me that the towns involved have not sued the BOE for defamation (not to mention mismanagement of funds). What on earth is going on?  I have followed each and every penny the HCSD has spent for the past six years.  The outrage can easily be linked to endless wrong moves, poor management of funds, secrecy, PR campaigns of smoke and mirrors and then the endless disregard of what a Hudson education actually tangibly delivers to its students. Not once in the current draft budget is there a warning label to the kids such as: BEWARE--WE ARE NOT GIVING YOU THE SKILLS YOU NEED TO SUPPORT YOURSELVES AND YOUR FAMILIES IN LATER LIFE. Read the Vision and Mission statements and the Six Keys of Success on the draft budget.  They sound like a Kardashian wrote them. (No offense K ladies.)

Even worse, read the minutes of the Community Budget Workshop held on March 25. Of course, it was a workshop without a community. No one showed up. The BOE asked itself questions AGAIN.  Some of the self-asked questions were more interesting than others. Board Member Amanda Grubler asked about the use of the fund balance and its use. She was shot down. Board Member Matthew Mackerer asked when the BOE (yes, the BOE) could expect to see the budget’s detailed expenditures. (Doesn’t the BOE set expenditures?)  Hmmm…

Then there is the very TINY matter that was approved at the March 25 meeting. Another Capital Project! Yes, that’s right. This one is for building improvements at the two school buildings. Total ask by Hudson is for the issuance of serial bonds for this refurbishment in the amount of (are you sitting down?) $8,345,000. Yes $8.35 MILLION DOLLARS. The District is legally obligated to pay this debt, but guess what is in the fine print: “Such bonds are to be payable from amounts which shall be levied in annual installments on the taxable real property of the District.” That outrageous bill is headed your way SOON. Your approval of this bond issue is on the May 20, 2025, massive school budget bill ballot, which Gossips has outlined already. So, it’s two sips of Kool-Aid for the price of one. Look for the exact wording as you vote. It is called “The 2025 Capital Project.” So, if you vote yes across the board on May 20, you will be allowing the HUDSON City School District to spend or borrow or waste or use a total of  $66,498,092 dollars (8,345,000 + 58,153,092), WHICH WORKS OUT TO BE ONE MILLION DOLLARS PER SQUARE MILE OF THE DISTRICT. 

Then there is the matter of the March 27, 2025, audit report of the District done by Raymond G. Preusser, CPA of Claverack. [The report can be found here. The letter referenced begins on page 72.] Its bone chilling criticism of the District comes on the very last pages of the 76-page report in the form of a letter. I assume this back letter gives Preusser some distance from the chaos outlined here. This respected firm points out the following defects and issues it has with the money handling going on at the HCSD:

Issues Related to Changing Environment

It was noted that there were significant changes in the Business Office personnel during the year. The Business Office manual was based off the previous staffing assignments. The District operates in a complex or frequently changing compliance environment. The risk to the District is that as compliance regulations change, complexities place task burdens on the District employees. The complexity of the tasks increases the risk that the District could feel adverse consequences if it were to lose a key person in the Business Office with no written procedures to be followed by a new employee. We recommend that the District update all critical financial processes in the Business Office Manual due to the staffing changes. These process documents should be reviewed for accuracy and completeness. Once prepared, employees should be required to maintain the documents in a manner that reflects any changes to the procedures. 

Books and Records

The untimely posting of books and records delays the year-end closing and ultimately the filing of year-end reports. In addition, it delays the decision-making process in order to make timely transfers and the balancing of books and records to the Treasurer’s Reports on a monthly basis.

It is imperative that all fund transactions be posted in a timely manner to have monthly reports prepared to monitor the activities of the particular funds. 

Reports to the Board

During our audit, we noted that the Business Office was not giving the Board monthly cash balances (Bank Reconciliation Reports), Budget Status Reports (for revenues and expenditures), Budget Transfer Reports, and Balance Sheets for all funds on a timely basis. The District’s books should be closed within fifteen days at the end of each month. We recommend that the Business Office provide the above documents to the Board and instruct them as to how to read such reports. The Board should become familiar with the information and its relationship to the fiscal operation of the District. The understanding of these reports will help the Board in the development of fund balance management. 

Interfund Receivables/Payables

During our audit, we noted that the interfund receivables were not reconciled with the interfund payables at year end. We recommend that the interfund receivables and payables be reconciled monthly to ensure accuracy within these accounts and funds. 

Payroll

An important Internal Control Procedure for payroll is to have someone outside of the Payroll Department review a “Payroll Exceptions Report” for each payroll. This report shows changes from payroll to payroll. These changes should be reviewed for accuracy based on documents provided to the Payroll Department. We recommend that the review of this report become a procedure during payroll processing for the District. 

Cash-General Fund

During our audit, we note the General Fund checking account at year end had a negative reconciled balance. Transfers to cover the payments made were not done until July. We recommend all transfers be made prior to the payments being issued to alleviate this issue. 

Reserve Plan

During our audit, we noted the following:

1. The District has not updated the written plan for the reserves. The Board is responsible for developing a written plan for use of its reserves. This plan should include when the reserves were formed, Section of Law, purpose, guidelines on funding levels and how and when disbursements should be made. Once the plan is completed it should be available on the District’s website.
2. The Board is responsible for having an annual review of the report on the activity. Once approved by the Board such report should be posted on the District website. We recommend that the Board takes steps to comply with the requirements set forth for having and maintaining such reserves. 

Fund Balance

Section 1318 of Real Property Tax Law establishes the maximum unassigned fund balance that can be retained by a school district. The current law limits this amount to 4% of the ensuing year’s budget. The District’s financial statements for the year ended June 30, 2024, indicate that the unassigned fund balance is in excess of the legal limit. We recommend that the District formulate a plan to control or use the excess fund balance. 

Budget Transfers

The matter of effecting budgetary transfers is of critical importance to the efficient management of a district’s fiscal affairs. It is important to note that such transfer authority has its basis in Section 170.2(I) of Commissioner’s Regulations. This authorization is limited to transfers between and within districtwide (ST-3) function unit appropriations for teachers’ salaries and ordinary contingent expenses. Since the adopted budget is, at best, an estimated expenditure plan, it is not unusual for conditions to arise whereby transfers between or among function/object categories are required to maintain fiscal balance. Appropriately, Section 170.2(I) of Commissioner’s Regulations provides for such transfers and permits the Board of Education to facilitate the procedure by authorizing “the Chief School Officer to make transfers within the limits as established by the Board.” During our audit, we noted that budget transfers were not made on a timely basis. We recommend that budget transfers are made prior to the authorization to expend all codes. 

So, as to the other issue on the ballot in May, which is the vote to replace three retiring BOE members. This is an opportunity to vote the right people in, but it also brings up the chance to think the right way. If, after all this spending and PR nonsense, we are still underserving the young learners, perhaps it is time for a new approach. Enough is enough. Here’s what I think. The City of Hudson and the towns of Claverack, Ghent, Greenport, Livingston, Stockport and Taghkanic should have an automatic seat on the Board of Education. Preferably mayors and supervisors would be mandated. Let’s say the City of Hudson is 2.2 square miles, roughly.  That leaves 64.8 square miles or 64 million dollars (per square mile) unrepresented. Bring everyone in on this mess of massive and outrageous spending. The students live all over these miles, and they will inherit this debt as well. Some of the bonds don’t mature for 30 years!

Also, as a boy who loves Hudson, I often wonder why the school district is a disaster and why our kids are so betrayed by the system we have set up and funded. Hudson is a great place to grow up in and live in. But there is a black hole of reality out on Harry Howard Avenue. Hudson and the towns that surround it are great places to live, and we all know it. There isn’t anything we don’t have in our 67 square miles, except a decent school. How can this be? When I think of Hudson, even from afar, I think of the good people and good institutions and merchants and artists and retirees, young starters, kids and teachers it has. And one place has always been at the top of my heart in Hudson is the Hudson Area Library. When you enter that building you can smell QUALITY, PROFESSIONALISM, AND DEDICATION. It warms my heart and that of my husband, Jeff, to just sniff around that place and to follow its work. So here I go with another bold proposal. Why not, on a temporary basis, immediately fire the entire Board of Education and turn over the school district’s management to the Hudson Area Library Board and the Library Director? She’s a serious leader. You couldn’t lose. Add it to their portfolio with a mandate to get to the bottom of the problems at HCSD and have them solve them. And get an auditor in who isn’t paid by the HCSD. AND stop the bond issue and stop the vote on the three new Board members. We don’t need them. At the end of their review have the Library Board APPOINT a new and real BOE. (Note here that I have not run this by the Library folks, so forgive me all.) No need to turn the HCSD over to the State of New York. It is part of the problem.

Let the Library organize the town representatives and together with them get our kids an EDUCATION and not another totally useless PowerPoint presentation full of nonsense. If you read the minutes of the Hudson Board of Education there is never “out of the box” thinking tossed around. So, let’s launch this grenade on them, and see what happens. Someone listening could contact the Library to get the ball rolling (and see how loud they scream). Call off the May 20 vote and get on with educating. Our kids deserve it. Pay the Library Board members for their service.

However this is done, I’m sure we can find several thousand people in our 67 square miles who would help us help stage this coup in the name of the 67 million dollars at stake on May 20, not to mention the thousands of young minds that we are in charge of.

Ken Sheffer