Senator Sonia Chang-Diaz
Massachusetts Second Suffolk District
Chang-Díaz Files Bill to Tighten Financial Accountability in State’s Network of Educational Collaboratives

BOSTON—Senator Sonia Chang-Díaz, Senate Chair of the Joint Committee on Education, filed legislation today to improve the governance and fiscal accountability of Massachusetts’ network of educational collaboratives. The bill comes in response to investigations into instances of financial mismanagement at the Merrimack Special Education Collaborative and other collaboratives around the state.

Reports released this summer by the State Auditor and Inspector General documented financial mismanagement stemming from lax oversight and inappropriate relationships between some collaborative boards and closely related nonprofit organizations. The most egregious examples centered around the Merrimack Special Educational Collaborative, where former Executive Director John Barranco allegedly transferred millions in taxpayer dollars from the collaborative to an associated nonprofit to fund excessive salaries, benefits, and personal expenses. Such expenses included luxury clothes, tickets to the Kentucky Derby, and improvements to two vacation homes. The Auditor's report also highlighted more than $30 million in undocumented expenditures from the Collaborative over a three year period.

“I continue to be deeply angered by reports of shoddy accounting practices, excessive compensation packages, and overall shameful abuse of tax dollars intended for children,” said Chang-Díaz (D-Boston). “My goal is that we move quickly as a legislature to make sure that abuses like this can’t go on unchecked again.” 

“This bill is a framework, rather than a final product, to help us toward that goal,” Chang-Díaz added. “Now that we are two-thirds of the way into the oversight hearing process, I wanted to commit some of the recommendations we’ve heard to paper. Getting focused feedback is always easier when there is a draft to respond to. This bill lays out a framework for a system-wide increase in accountability and financial controls, while recognizing that the Education Committee will still have more ideas and input to consider."

“I continue to be deeply disturbed by the financial abuses in some of our education collaboratives in Massachusetts and the findings demand action now,” said Senate President Therese Murray (D-Plymouth). “I applaud Senator Chang-Diaz for taking an important step forward to ensure oversight and accountability of these organizations and the Joint Committee on Education will continue to have my full support on this legislation.”

The bill addresses the conflicts of interest surrounding collaboratives and their related non-profits by creating clear requirements for the roles and responsibilities of collaborative board members and staff. The bill prohibits any collaborative board member, manager, or staff member from serving in any similar capacity in a related nonprofit organization, and creates a cooling-off period before a former collaborative board member can seek employment with a related nonprofit. It also requires collaborative board members to file disclosure forms with the Ethics Commission to reveal conflicts of interest stemming from any financial interest they may have in a related nonprofit organization.

The bill improves accountability and transparency by creating new reporting requirements for collaboratives and related nonprofits. It requires collaboratives and related nonprofits to file with the Department of Elementary and Secondary Education (DESE) an annual report and audited financial statement completed by an independent auditor, and subjects collaboratives to periodic comprehensive reviews by DESE at least once every six years—equivalent with traditional school districts. It also makes explicit that collaboratives are subject to the same competitive bidding requirements that school districts must follow when contracting for goods and services.

The bill draws on many of the recommendations made during testimony at oversight hearings held over the past three weeks by the Joint Committee on Education. For example, the bill assigns greater and more explicit regulatory authority to DESE, requires collaboratives to use standard accounting principles, and ensures that appointees to collaborative boards represent important skill sets--such as financial controls, business operations, and educational programming. The bill also requires that school administrators at collaboratives be certified professionals, equivalent to the current requirement on teachers at collaboratives and on par with requirements for local school district administrators

Other oversight measures put in place by the bill include:

  • Requiring education collaboratives to perform an annual independent financial audit (similar to many nonprofits), which then must be shared with parents, member school districts, and DESE each year;
  • Requiring board members to complete a training developed by DESE on the duties and responsibilities of board members;
  • Requiring that collaborative boards include a voting member appointed by DESE;
  • Requiring each collaborative board member to present the collaborative’s annual audited financial statement back to their home school district (or other appointing authority), and to certify that he or she has read the financial statement;
  • Requiring audits to include information on “red flag” categories, which the collaborative board, member school districts, DESE, and the auditor would then review; and
  • Creating regulations to ensure collaboratives contract only with related nonprofits that provide services in a cost-effective and transparent manner.

The bill also creates two commissions: one to study the provision of services to individuals over age 22 and another to make recommendations on the ideal role and organizational structure of  collaboratives relative to the state’s K-12 education system in the future.