BELLOWS FALLS — Rockingham School District auditors got some good news and bad news during an update Monday night on the work they’re doing to straighten out the school district’s and supervisory union’s finances.

Auditors at RHR Smith & Co. of Buxton, Maine told the Rockingham School Board the good news that no money is missing and in fact there is a healthy surplus of over $2 million, which represents about 20% of school expenses.

But Ron Smith, the company’s chief, said Rockingham overpaid its supervisory union dues by nearly $645,000 last year, and the overpayment went undetected for more one year.

Additionally, he said, the business office made a cash payment of $645,000 from Rockingham to the Windham Northeast Supervisory Union, but “this was never reported” on the books. Additionally, he said, Rockingham would receive $500,000 from the supervisory union for another overpayment.

Smith said the $645,000 overpayment and lack of documentation is “a big concern, folks.”

Smith called the school district’s finances an “ongoing struggle” and said he supports the decision to add an accountant position to the business office. He reminded school board members that the so-called audit firm management letter issued in December “was not flattering.”

He said the auditing firm “brought” a former accountant back to the business office and, with her help, was able to put the books back together.

The Windham Northeast Supervisory Union and its member school boards have been in shock over the departure of its former chief financial officer Flora Pagan, who left after auditors reported finding serious “misrepresentations” in the books. Pagan had been placed on administrative leave, but she later resigned.

As the auditing firm rummaged through the books, the school district mostly heard about overpayments, surpluses, and extremely poor accounting, rather than running out of money.

Smith and accountant Miranda MacDonald declined to answer Rockingham school principal James “Jiggs” McAuliffe’s question about whether federal COVID-19 funds had been mishandled by the school administration. He said there was a “concern about controls and best practices”.

“Have there been embezzlement? McAuliffe, who attended the meeting remotely, asked. McAuliffe said it was “a real concern”.

“We’re not ready to talk about it,” Smith said, noting it was for a later conversation and not open to the public.

Smith said former members of the administration, whom he did not mention by name, cooperated while the auditing firm worked to straighten the books.

Priscilla Lambert, chair of the Rockingham School Board, said after the meeting that she was confident the auditing firm Smith would “adjust the books”.

She noted that Rockingham’s $700,000 overpayment to the supervisory union would be resolved once the district’s finances were “reconciled” or balanced.

She noted that Rockingham’s board has already taken steps to return much of the $2.01 million 2020-21 surplus to ratepayers, or set it aside for future capital costs. .

These actions will have to be ratified by voters at the March 1st municipal assembly.

Lambert said she didn’t know how much the work of the auditing firms and financial consultants who were hired by new superintendent Andrew Haas was costing the school district. “They work very hard,” she said.

“If we don’t (do the job) it will cost a lot more,” she said.

Contact Susan Smallheer at [email protected]