Audit: SERC underreported millions in expenses

The State Education Resource Center (SERC) underreported expenditures by millions, according to a new report from the Connecticut State Auditors of Public Accounts.

Under state law, quasi-public agencies like the SERC are required to report spending to the Office of the State Comptroller so that these expenses can be included in a public spending database.

According to the audit, among the expense categories reviewed, auditors found $6,610,478 in underreported expenses. The SERC had reported just over $16 million in expenditures to the database but actually had more than $22.6 million in total expenses.

While this finding doesn’t mean the SERC was necessarily lying to the state about its expenditures, it does mean that management at the organization was not adequately reviewing the information submitted to the Comptroller’s office. It also means that members of the public utilizing the Comptroller’s database did not have access to accurate records.

Leadership at the SERC did not argue with the auditors’ findings. In their response, they said that the issue was with the “existing accounting application.” They say they have addressed the issue both with the auditors and are in the process of finding a new accounting software. They were expected to have this software up and running at the start of this past July.

Additionally, the audit found that the SERC was not “maximizing its revenue” by holding onto excess cash. Auditors argued that the organization should have been investing its more than $7.7 million in excess cash in “the Treasurer’s Short-Term Investment Fund (STIF), a low-risk money market investment pool.” According to the audit, the SERC could have earned about 5% return on those funds given the STIF’s effective yield. In its response, SERC leadership claimed that they disagreed with this finding because “a substantial portion of the cash balance represents money related to the Emergency Assistance for Non Public Schools Grants.” They argue that those funds need to be readily available and they would not be if they were tied up in an investment fund.

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