Schools

Comptroller Report Cites "Deficiencies" In FRHSD Outside Legal Spending

District taking steps to improve areas of concern.

The Freehold Regional High School District was one of five districts around the state that was cited by the state comptroller for failing to control excessive and improper payments for legal services, according to information provided by the office.

At Freehold, the comptroller’s office found that 30 attorneys from a law firm of 54 attorneys billed the district for legal services in 2011. According to information provided by the State Department of Education, the district spent $42 per pupil on legal services in 2011.

That was slightly below the state average of $44 per pupil statewide. The district spent $493,414 on “outside legal costs,” with the money going to the lawfirm of Schwartz, Simon, Edelstein & Celso LLC as Board Attorney.

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The report said the district’s contract with the firm capped the total bill at $213,000, but that a request for relief from the cap could be granted for “extraordinary matters.”

A statement released by the district said they are “committed to efficiently delivering a high quality education to the students of the Western Monmouth County Communities that it serves, and strives to continuously improve in all areas of the operation including the subject matter of the Office of the New Jersey State Comptroller’s (OSC) Report.”

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The statement added that “The concerns and best practices noted throughout the report have either been addressed or are under consideration as the district develops policies and procedures regarding the procurement, use and management of legal counsel.

Going forward the statement from the district added, “We will continue to work closely with the Office of the new Jersey State Comptroller, along with other agencies and professional associations, to further refine the district’s procedures in accordance with current industry best practices.” 

Along with the regional district, the comptroller also looked at the North Bergen Township, West New York, Medford and Plainfield Public Schools. The report also includes a checklist of best practices for local organizations to use for “engaging and managing legal counsel,” the office said.

“We took on this project to develop guidance that local governments could consult when contracting with outside counsel and managing their legal departments,” Comptroller Matthew Boxer said.

Boxer added, “What we found were repeated failures to review legal bills and manage legal contracts in a way that looks out for taxpayers. Public officials need to scrutinize their legal bills as if they were paying for them out of their own pocket, otherwise taxpayers are going to get ripped off.”

At Freehold, the report cited several deficiencies, including the board attorney submitting bills that were “non-descriptive and block-billed, making it impossible to determine whether the billed tasks should have been covered under the retainer.”

Also cited was the district’s use of the Public School Contracts Law (PSCL) for legal services. The report stated that the resolution appointing the firm “was deficient because it did not contain supporting reasons for the appointment as required by the PSCL,” and that “Freehold did not use a competitive vendor selection process in procuring the firm.”

Districts are not required to have a competitive procurement process for outside counsel according to the PSCL, but it is recommended “in order to ensure that they are obtaining the most cost-effective legal services.”

The board attorney also reported to the office that “‘routine’ telephone calls and correspondence,” were part of the firm’s $1,250 monthly retainer. They defined routine as “brief conversations or other inquiries which do not require research and/or a written response.”

There were close to 260 billing entries the office said it could not determine whether the communications should have been part of the retainer. The board attorney also billed hourly for calls with district personnel, but did not provide a description for the subject matter.

In the report, the district’s business administrator said that when the bills were reviewed for payment he “did not consider whether 'routine,’ communications were being improperly billed at an hourly rate.”

A remedy for the situation, according to the report, is “Clearer retainer language and descriptive, individualized billing by the board attorney,” which “could have minimized the district’s costs and prevented potentially duplicative billing.”

There were exclusions from the cap of legal fees including items connected with special education as well as fees reimbursed or paid by insurance. After the firm exceeded the cap the report said the district “did not take any formal written action authorizing the law firm to exceed the cap or take other steps to document any authorization.”

The report added, “By failing to take formal action or document any authorization to exceed the cap, Freehold engaged in a practice that lacked transparency concerning legal costs.”

The report compiled by the office said that if the districts had followed the best practices provided “the result would be significant cost savings, enhanced transparency and overall improvements in the legal services received.”

The report also said before the review was started the district reached out to the comptroller’s office “to seek assistance with improving the district’s procurement process for outside counsel.” The result of the meetings was the development of “a competitive procurement template,” which the district said they would share with other parts of the county.

The district also said that with regards to using multiple attorneys in the firm “historically there had been instances in which multiple attorneys from the firm had attended the same meetings,” on behalf of the district according to the report. The administrator told the comptroller’s office he had objected to the practice and that the firm has since stopped the practice.

A copy of the report is included in this story. 






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