New audit finds more problems in Manatee school district's finances

twhitt@bradenton.comDecember 12, 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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New audit finds more problems in Manatee school district's finances

MANATEE -- The state has released an audit of the Manatee County School District for 2012-13 that found several problems in a time when the district was reeling from the resignation of the former superintendent and the new superintendent was implementing a financial recovery plan.

For the fiscal year ending in June, state auditors found that the district did not adequately document charges to the special education program for early intervention programs, resulting in a $1.5 million in questioned costs. Other funds were used contrary to federal regulations.

Also, almost $92,000 in Improving Teacher Quality Program money was used for "purposes contrary to federal regulations," resulting in questioned costs.

Last year, former Manatee County School Superintendent Tim McGonegal quickly resigned after revealing that the school district was facing a deficit. The School Board conducted a national search and hired Rick Mills as the new superintendent.

Mills launched a 100-day plan to clean up district finances as part of his transition into the superintendent role.

But even as the district laid off teachers and worked to rebuild funds, it continued to make financial errors, according to the auditor's report.

"These findings, along with previous operational audit findings, give us a detailed account of the areas that need to be addressed by this school district as it relates to the Auditor General," Superintendent Rick Mills said in a statement sent out Thursday morning. "Our school district is on the right path to fiscal stability and is committed to absolute transparency in all areas. We will work diligently to overcome the costly decisions of the past so we can restore trust and move forward together to the greatness our students and community deserve."

No one from the school district returned calls throughout the day about whether the district has implemented the state's recommendations for better accountability or how the mistakes will affect this year's school budget.

The report on the last fiscal year indicates that the district could face further budget shortfalls in the coming year as the district grapples with repaying more than $1.8 million in questionable spending of federal awards, according to the auditor's findings.

The district applied federal rebates to the General Fund when those rebates should have gone to Title 1 programs aimed at serving poor students. The district also did not document allocations of special education money to the county's charter schools.

The district experienced state funding reductions and did not appropriately amend the budget. As a result, the district continued to overspend, according to the report from the Auditor General's Office.

"The over-expenditures resulted, in part, because the District did not appropriately monitor and limit the number of staff positions as full-time employees paid by the General Fund increased from 4,700 to 4,774 employees during the 2012-13 fiscal year. Without amending the budget for reduced State funding and effectively limiting staff positions, the District's budgetary monitoring process was ineffective in limiting expenditures to budgeted amounts. As a result of ineffective budgetary monitoring procedures, the District experienced a deficit total assigned and unassigned fund balance of $8.6 million in its General Fund at June 30, 2013."

The state also found that even after the school district knew about the budgeting issues that left the district with a deficit, it did not follow procedures designed to repair the problems.

For the 2013-14 fiscal year, district personnel indicated that most of the recommendations from a January 2013 forensic investigation of district finances were implemented, as the district began using an automated resource allocation system to monitor employee positions, hired a new budget director, reduced the number of certain staff positions, and made other salary adjustments.

However, certain projected costs were excluded from consideration in the 2013-14 fiscal year original budget, according to the audit.

"For example, budgeted expenditures excluded $1.7 million for additional Special Education program personnel, $800,000 for high school teacher salaries and benefits for teachers that transitioned along with students to other schools after a high school closed, and $780,000 for teacher lead program expenditures that District personnel initially overlooked. In October 2013, subsequent to the original budget adoption, the Board amended the budget to reduce the projected June 30, 2014, total fund balance of the General Fund from $10.3 million to $9.35 million."

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