School department kept Millinocket in the dark about bank accounts holding $630,000


Last fall, Millinocket city officials accused the head of the school department of breaking state law by denying access to bank accounts containing more than half a million dollars in funds. fundraising and scholarship donations.

Dr. Joshua McNaughton, the superintendent of Millinocket schools, refused for three months to hand over control of bank accounts containing a total of $630,000 to the Millinocket town government in violation of state law, according to state law. Treasurer Mary Alice Cullen and City Solicitor Dean Beaupain.

Joshua McNaughton is the superintendent of the Millinocket School Department. Credit: Courtesy of Millinocket School Department

The accounts contained student activity funds totaling approximately $130,000 and an account containing a $500,000 gift from a Stearns High School alumnus. The treasurer had no access to the accounts and the city had no knowledge of the existence of the accounts for years, according to emails the Bangor Daily News obtained through a public records request. The city attorney called the accounts “illegal” in an email last November.

State Law requires municipal treasurers overseeing all town finances, including school funds when the school department is part of the town, as is Millinocket. Treasurers can only make payments from city accounts through a mandate process at public meetings.

Town of Millinocket officials said the school department’s failure to release the accounts circumvented that process and kept them and the public in the dark about the source of the money and whereabouts. how it was spent.

McNaughton has not been charged with any wrongdoing and all funds are now on track for city oversight. But the department’s resistance to following the treasurer’s directions is indicative of a lingering pattern of mistrust between the 440-student school department and the city government, according to interviews with city officials and a school board member.

McNaughton refused to relinquish control of the accounts beginning in August, when RHR Smith & Company began auditing the city and school department and discovered them, according to emails obtained by the BDN. .

At this point, the account with $500,000 is under the city’s control. The student activities funds, totaling $130,000, are supposed to come under city control in June under an agreement reached at a Nov. 24 meeting with McNaughton, Cullen, Beaupain and the auditors.

The school department’s failure to report the accounts meant that “the money was handled without going through a public process, including a warrant process, [or] being even [on] public diaries, so people know what the money is for [or] where the money is coming from,” City Council Chairman Steve Golieb said.

This way of operating predated McNaughton, who became Millinocket’s superintendent last July, but “he chose to continue down this path, instead of recognizing and understanding the importance of following our charter,” Golieb said.

“I’m concerned at this point that I’m hearing state laws aren’t being followed,” said Erika Mackin, a school board member who was appointed in February. “For three quarters of a year, [McNaughton] had the opportunity to make things right, and he avoids it.

McNaughton said school department and city attorneys are “working to resolve the issues regarding the school’s accounts.” School board president Warren Steward did not respond to two requests for comment.

The school department’s failure to report the accounts was a legal liability because they were filed under the city’s tax ID, Beaupain said in emails to city officials. Although the accounts bear this number, they were never opened, audited, or authorized by the city treasurer’s office, and the money was not deposited into the city’s general account.

“If we are aware of illegal accounts and fail to correct them, we will have knowingly contributed to an illegal process,” Golieb said, adding that if there was any wrongdoing, the city and the school department would be ” seriously wrongful”. .”

Ron Smith, the accountant whose firm audited Millinocket, said the city council could face civil penalty if the accounts remain inconsistent with state law.

McNaughton said in emails to Beaupain and city officials that the school department had overseen its own accounts for decades and the city hadn’t had a problem before Smith began its audit.

The school department has twice rebuffed attempts by the city to bring these accounts under its control.

“After consulting with our accountant and being advised that the school department is not in violation of any law holding these accounts, I have made the decision that the accounts will remain in the possession of the school department as held. summer,” McNaughton said in an Oct. 19 statement. 4 e-mail to Beaupain and Cullen.

The school board voted unanimously the following month against Cullen and Beaupain’s proposal to transfer control of two student activity accounts to the city.

McNaughton said the process would add more work and take time, according the minutes of the November 16 meeting of the board of directors. Other cities in Maine allow their school departments to oversee their own accounts, and there are checks and balances and a process for removing accounts, he added.

School departments can manage their own accounts, but all expenses and warrants must be approved by the school board through a public process, said Steven Bailey, executive director of the Maine School Management Association. The Millinocket school department had not requested money orders for student activity funds or deposited that money in the city’s general account, Beaupain said.

The later Millinocket School Board voted unanimously at its meeting on November 30 to give the school department time to convert funds from student activities into nonprofit accounts until they are transferred to city control on June 30. That vote came after the Nov. 24 meeting where McNaughton and the city agreed to transfer the funds to city control. .

Millinocket City Manager Peter Jamieson said the city’s agreement with the school department would allow booster clubs and student groups that raised the funds to continue to control their own money.

“The only request is that when planning to spend these funds, they be put on a warrant and approved by the Millinocket School Board through proper process,” Jamieson said.

“Now that this issue is resolved, we hope to move forward with clear communication and strengthen the relationship between the city and our local school board.”

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