School Audits Demand Immediate Attention & Action

This week, the Boston Globe ran an article in the NORTH section about how $1.6 million in the Hamilton-Wenham Regional School District (HWRSD) financial accounts was "found" by a newly hired financial accounting firm.

The findings came as little or no surprise to many town officials, taxpayers, parents and especially to Enough Is Enough (EiE), the fiscal watchdog group that was formed three years ago in Hamilton and Wenham to stave off the school district's process of "budgeting by overrides" which resulted in burdening residents of Hamilton and Wenham with two of the highest property tax rates on the North Shore.

According to the article this was the third time in the past year that the HWRSD was found to have significantly more money that had been indicated.

One of the other two cases involved funding that the HWRSD allegedly needed in order to pay for a new boiler for the Cutler School.  Faced with the urgency and need as expressed by the School Committee (SC) that no funds were available, voters, along with support from EiE, overwhelming approved bonding at both Town Meetings to help pay for the project.  Now we are told that the funding was unnecessary and that the district paid $794,000 for the heating system out of existing funds.  The question now is whether the SC will continue to seek the bond approved by the voters FOR THE BOILER and attempt to divert those funds to other projects…such as work on the High School auditorium…a project that was previously rejected by the voters.

According to the Globe article, SC chairman Alexa McGloughan praised the work of the new financial accounting firm, stating "I think we have finally cracked the code on how to demystify school accounting" and that she felt that new accounting practices would lead to better efficiency.

Enough Is Enough has responded by saying it wishes that Ms. McGloughan felt the same way about the thorough and lengthy (400 pages) and complete OPERATIONAL AUDIT REPORT that was completed last year after having been overwhelmingly approved by voters in both towns.  That report clearly supported a previous report (The Blue Ribbon Report) that found that the HWRSD costs nearly $2 million more per year than comparable school districts.

The difference with the OPERATIONAL AUDIT is that it clearly paved the way for correction of the school cost discrepancies with specific recommendations.  Unfortunately, the SC and district have failed to implement the audit's numerous COST-SAVING recommendations and initiatives, choosing instead to implement the few COST ENHANCING initiatives from the report.

This failure to improve the efficiency of our school district, after being handed a $90k Operational Audit roadmap, is unacceptable.  Combine that unwillingness to act on the Operational Audit with the recent financial audit which uncovered $1.6 million, and according to EiE, "that suggests better efficiency is not, as suggested within the article, a primary concern of the School Committee".

"You're going to create a better budget going forward if you know where you're coming from," McGloughan stated.

I believe that should be a naturally true statement and hope that the SC will not continue to ignore the cost reducing recommendations of the Operational Audit when preparing their budget.  It's been more than a year since the Operational Audit was unveiled.  It's time to implement many of the recommendations that until now have been ignored... ignored similarly to the financial accounting that  recently uncovered the $1.6 million.

QUESTION: Does anyone else wonder much we paid to have the new accounting firm straighten out the books and in so doing find the $1.6 million?  Talk around town is that the firm spent more than 200 hours on the project.

What the Internet Can and Cannot Do

It is often said that “the only thing new in the world is the history that you don't know". This saying kept going through my brain when a home valuation web site named Zillow was launched to a lot of buzz a couple of years ago.  The press, as usual, carted out the same tired (and wrong) prediction that it has made for fifteen years: that home valuation sites like these will put Realtors® out of business or at least greatly reduce our fees.

Actually, over the last fifteen years, the opposite has transpired: it doesn’t matter whether you are talking about law, medicine, accounting, mortgage or real estate; the more that the public uses the Internet to gather information, the more they turn to professionals before they make major decisions. That’s because there is a huge difference between gathering information and interpreting it.

Over ten years ago, a friend of mine penned a Real Estate Internet Warning that seems even more relevant today than it did then:

REAL ESTATE INTERNET WARNING©

“Despite advertising claims to the contrary, the Internet is NOT an experienced Real Estate Professional. It cannot consult, counsel, advise, have knowledge of local laws and market conditions, make judgments, "own" the result, or most importantly, understand your individual goals and needs and care about you as a Client. Furthermore, while the Internet can provide information, it cannot interpret it.”
                                                                               . . .Mollie Wasserman

The reason that the press keeps getting it wrong is that they do not make the distinction between information and knowledge. As John Tucillo states in his book The Eight New Rules of Real Estate, “Information is a collection of facts or observations about reality. Knowledge is actionable”.  In today’s information age, consumers can increasingly get all the information that they want or need, but it’s useless unless someone with expertise in the field can provide the knowledge to allow them to correctly act upon it.  Information, without the context of a pro who can share the day-to-day knowledge of the industry, is just data.  If a consumer were to act on it without context, they could very well reach incorrect conclusions and achieve undesirable results.

As my colleague (and fellow CyberStar™) Margaret Rome so eloquently stated on her blog regarding Zillow: “This site depends on public records for its data. But public records will not show factors, like recent additions and improvements or the condition of the interior, that affect price. Public records can also be wrong; a friend of mine checked her house and said she wants that fireplace she’s supposed to have, but will not give up the second bathroom they didn’t count.  If the information about a house is wrong, how valid is the price estimate?  Besides, price is only one factor in buying or selling your home, and getting to the settlement table means avoiding traps and overcoming obstacles.”

A top agent will be experienced at:

• negotiating the terms of your contract,
• making sure only qualified buyers troop through your home,
• meeting and dealing with appraisers, and
• working with home inspectors and lenders to be sure you are protected from start to finish.

In other words, technology is a fabulous way to gather data and can do functionary tasks better, faster, and cheaper than any human being ever could. But the danger does not lie in understanding that technology. The danger is that by itself, the Internet can never provide the fiduciary counsel required in areas such as medicine, mortgage lending, law, and real estate.

Please remember that while the Internet can provide information, it can never interpret it.  And here's the straight scoop: A Realtor's® true value is not in helping you find a home, or getting you numbers regarding comparable sales, though we certainly have the tools to do so.  Our TRUE value is in using our experience and expertise to get you the best value once you find your home or the most money in your pocket when it comes time to sell.

To obtain an accurate assessment of any data you're receiving online, please contact me direct at: (978) 233-2828.


Thank You!