Portland school district rebuilding its finance and payroll systems

The Portland Public School District has made progress mending its broken financial system, but work remains.

An audit of the Portland school district in March 2022 identified significant problems with the district’s finance department, including a lack of internal oversight and documentation checks and balances within the department, and failure to complete accounting tasks on time.

Around half a year later, the system’s financial system broke down. The district failed to pay hundreds of employees on time, leaving some struggling to pay for basic expenses and saddled with interest. It also created a substantial rift between district management and employees and led then Superintendent Xavier Botana to resign.

Since then, district leadership has been working to stabilize its financial system and regain employee and community trust. At a school board meeting Tuesday night, the district’s newly minted executive director of finance Helene DiBartolomeo outlined the work done since last year’s financial breakdown, what the district expects to see in this year’s audit, and how the district plans to create a sustainable finance department moving forward.

During the height of the payroll crisis, the district struggled week after week to pay its employees accurately and on time. The initial disintegration of the payroll system was due largely to software issues and a lack of staff. Eventually, the district got the payroll system back on track, paid employees what they were owed and covered expenses incurred when they weren’t paid on time.

But the breakdown showed that the payroll and finance systems needed a major overhaul.

The district hired a consultant to examine what went wrong. The consultant concluded what the district suspected – that software issues, understaffing and a lack of checks and balances led to the collapse of the payroll system. The district also contracted with a consultant to help prepare for the 2023 fiscal year (July 2022 to June 2023) audit, started preparing to outsource its payroll to ADP Inc., a company that provides human resources, payroll, tax and benefits administration services, and hired a number of new staff.

With all that done, the district is on track to having consistently reliable payroll and finance systems, said DiBartolomeo.

But the financial woes of last year are not completely over. Because the audit will examine the fiscal year that ended in June (the year the payroll system failed), auditors are likely to find significant problems when they do their review in early December. DiBartolomeo said she expects the auditors to air concerns about the integrity of the district’s financial statements, failure to file federal and state tax documents on time, and insufficient checks and balances, written departmental procedures and reviews of financial documents.

DiBartolomeo is working to solve these issues preemptively. This will give the district a head start addressing those issues and allow the finance department to move forward on solid footing, said DiBartolomeo.

Right now, the district is working with contracted employees to assess and reorganize its finance and payroll systems. But soon those contracts will end and the district is looking for new people to bring in.

“Our goal is to ensure we don’t continue to rely on the contracted services and that we’re able to run on our own,” said DiBartolomeo.

The district plans to hire a payroll specialist, an accounting manager and a finance specialist.

The district is also rolling out its new payroll system and creating a ticketing system where employees can file concerns about pay or benefits and have them addressed in a timely manner. The district plans to register all employees and train them in the new system, work with managers to make sure they can help employees, visit employees to provide additional support, and create a question-and-answer page on the district’s website before employees start using the new payroll system in December.