New audit finds more problems in Manatee school district finances

twhitt@bradenton.comDecember 13, 2013 

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

For the fiscal year ended in June, state auditors found district administrators did not adequately document charges to the special education program for early intervention programs, resulting in $1.5 million in questioned costs.

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

Last year, former Manatee County School Superintendent Tim McGonegal quickly resigned after revealing the school district faced a multimillion-dollar deficit. The School Board conducted a national search and hired Rick Mills as superintendent.

Mills launched a 100-day plan to clean up district finances. But even as the district worked to rebuild funds, it continued to make financial errors, according to the auditor.

"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," Mills said in a statement Thursday.

"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."

Steve Valley, school district spokesman, said the district has 30 days to respond to the latest findings -- until Jan. 9 -- to explain why it shouldn't repay all or part of the money.

New director of finance Tommy Crosby will prepare the state report for Mantee County School District, Valley said.

"He has extensive experience with these kinds of audit findings," Valley said. "We have a veteran dealing with these issues."

District internal auditor Byron Shinn will not help prepare the state report, Valley said. The state audit indicates the district could face further budget shortfalls next year as it grapples with repaying more than $1.8 million in questionable spending of federal awards.

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

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

"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," the audit reported. "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 the school district did not follow procedures designed to repair the deficit even after it knew about the budgeting issues.

For the 2013-14 fiscal year, district personnel indicated most 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 original 2013-14 fiscal year 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," the auditors found. "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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