Audit: Manatee School District faces $7.2M hit to general fund

The HeraldDecember 4, 2013 

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Manatee County Schools Superintendent Rick Mills listens to public comments during a school board meeting earlier this month. FILE PHOTO/PAUL VIDELA/Bradenton Herald

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MANATEE -- A state audit of the Manatee County School District operational finances could cost the financially embattled adminstration $7.2 million it can ill afford to lose.

The audit focused on the 2012-13 school year, but also addressed financial concerns dating as far back as 2005-06.

Preliminary findings by the Auditor General Office of Florida suggested 33 different operational procedures be tightened to prevent further fiscal hemorrhaging. If the auditor's findings are not reduced during the 30 days the district has to appeal, the Manatee County School District could face as much as a $7.2 million reduction in its general fund balance as a consequence of this audit.

Superintendent Rick Mills said the audit findings come as a blow but not as a surprise.

"It's a significant matter," Mills said. "The potential amount is pretty substantive."

During the 2012-13 fiscal year, the district general fund balance declined 109 percent from a deficit of $4.1 million as of June 30, 2012, to a deficit of $8.6 million as of June 30, auditors found.

State auditors were not complimentary toward district financial recovery efforts either.

"Although the Board established a fiscal recovery plan in October 2012, the District was unsuccessful in implementing the plan as it continued to experience a decline in financial

condition," state auditors reported.

The dismal fiscal findings were not a surprise since the audit began in March, said Mills. He said auditors have discussed the issues and requested supporting documents, which gave district officials a good idea of problem areas being researched.

The lion's share of the questioned spending targets $5.482 million that may not have been spent in accordance with funding guidelines, according to a press release by Manatee County School District spokesman Steve Valley.

"This may require reinstatement of costs from the general fund," according to the audit summary. In addition, a workers compensation fund deficit of $1.7 million will require most of repayment to come from the general fund over the next two years, the summary said.

Mills said the school district is on track to do so as it has earmarked $727,000 this year to restore its workers comp balance.

Other potential shortfalls:

• $1.743 million in capital funds may not have been spent in accordance with funding guidelines, but may be absorbed by other capital funds and should not impact the general fund, the summary stated.

• $65,255 in purchasing card rebates are owed to other funds

The district has 30 days to respond to the audit findings and possibly mitigate questioned costs.

"We're confident we can reduce that ($7.2 million) amount," Mills said. "We welcome the opportunity to work with the auditor general to remediate many of the report's findings. We're going to have to work the next 30 days to refute some of the findings."

Auditors noted the district "has significantly less resources for emergencies and unforeseen situations than other school districts of comparable size." Other problem areas include insufficient cash controls and workers compensation claim procedures and soft information technology security.

School board member and former chairwoman Karen Carpenter said many aspects of the report bothered her such as the authorization of district administrative staff to change records.

"Of course I'm concerned about the dollar amounts and the impact it will have on the budget, but some people had unlimited authorization to change documents. They should not have had that kind of access. It's too loose," Carpenter said.

The audit was not performed because the Manatee County School District finances have been in disarray for at least three years. Every school is audited at least once every three years by the state.

The operational findings are only half the bad news the school district can expect to receive from the state audit, Mills said. The Manatee County School District will receive state audit findings on district finances and handling of federal funding by Dec. 13.

"I have concerns the findings there will be similar in terms of repeated findings," Mills said. "It will be a pretty substantive amount."

Mills said he and his team look forward to a light at the end of this long fiscal tunnel.

"It's been a challenge for my leadership team and me," he said. "We're working vigorously to move forward and are confident we will get past this challenge. We are going in the right direction. We have to get financial stability."

The Manatee County School Board will discuss the report at 3 p.m. Tuesday, Dec. 10.

Chairwoman Julie Aranibar said the report shows how much wrongdoing was covered up. Aranibar said the Manatee County School District has had the same findings over the last four state audits.

"They are not trying to be punitive," Aranibar said. "They have measures in place to protect us from the district's demise. We refused to follow guidelines. What we did jeopardized the education of Manatee County."

-- Erica Earl, Herald education reporter, contributed to this report.

Sara Kennedy, Herald reporter, can be reached at 941-745-7031. Follow her on Twitter @sarawrites.

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