Senior Partner Michelle Laubin Calls for Forensic Audit of Shelton City Finances

February 21, 2019 By Robert Sample

A local attorney, who also serves on the city’s Board of Apportionment and Taxation, criticized findings in the recently released city audit, in which the school board was cited for some $3.1 million in budget shortfalls.

During the public comments portion of the Feb. 14 Board of Aldermen meeting, the board heard from Michelle Laubin, a senior partner in the Milford office of the law firm of Bercham & Moses, spoke during the public comment time during the Feb. 14 Board of Aldermen meeting, saying that her firm often handles funding issues for local school boards — particularly issues surrounding special-education excess funding costs.

"My overall impression was that you were not provided with all the information you need on the issue," said Laubin, who lives on Cornhill Road in Shelton.

David Cappelletti, a CPA with Clermont & Associates, LLC, reported his findings to the Board of Aldermen last month, stating that, in his opinion, the Board of Education accumulated a $3,170,300 loss in five special-revenue accounts maintained by the school district.

The biggest shortfall is for $2,776,708 in the state excess cost-grant program, which is a fund used to subsidize high-cost special education programs. Much of its revenue gets reimbursed by the state, hence the name of the fund. The remaining shortfalls are in a special revenue account of accumulated loss, summer school, $14,470; educational grant funds, $85,889; the school lunch program, $178,394; and school rental program, $114,839.

Cappelletti did not suggest there was any wrongdoing on the part of the Board of Education or school district staff. Instead, he stated that the problem has arisen from misunderstandings of the budgeting requirements and a lack of communication between the school district and City Hall. But Cappelletti did add a note in his report stating that "the general fund advanced $2,690,819 to the special education funds, which is expected to be repaid when funds are available." School administrators state this is an incorrect understanding of the law that needs to be removed from the report.

School Superintendent Dr. Chris Clouet said the district’s legal counsel sent a letter to Cappelletti on Jan. 17 stating that the administration "detected some incorrect conclusions in the audit report to the city and asked them to be changed." The Board of Education received no response, prompting a second letter, dated Jan. 31, to Cappelletti asking for the same remedy, and again no formal response was provided. That has led to the Board of Education filing an ethics complaint with the State Board of Accountancy "about what we believe is a lapse in ethical auditing," added Clouet. (See separate article on A1.)

Laubin said that special education services typically involve large dollar amounts but are reimbursed by the state of Connecticut.

"Two times a year the Board of Ed applies for excess cost reimbursement (from the state) and two times a year it comes back into the city treasury," said Laubin.

Laubin said the recent audit unfairly blamed the Board of Education for the shortfalls, and called for a forensic audit of city finances. She also said despite calls for better communication by both the Board of Education and the Board of Aldermen, the Aldermen seem unwilling to collaborate with education officials.

There was no immediate response to Laubin’s remarks, but near the end of the meeting Board President John Anglace, Jr., announced the formation of a policy committee designed to foster a better understanding of budgeting issues. On the city side, members will include Mayor Mark Lauretti, Finance Director Paul Hiller, Assistant Finance Director Lynn Piscitelli and Treasurer Raymond O’Leary.

"The Board of Education will appoint its own people to the committee," said Anglace. "I purposely don’t believe any of us (the Aldermen) should be on it. This is an administrative issue, and administrative people should be on it."

The Board of Aldermen unanimously approved Anglace’s nominations to the committee.