Manatee Schools' internal audit turns up misused funds

mdelaney@bradenton.comMay 29, 2014 

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Manatee School District Superintendent Rick Mills listens as Manatee County School Board members Robert Gause and Dave "Watchdog" Miner discuss opening negotiations regarding Mills' contract with the school district Tuesday during a school board meeting. GRANT JEFFERIES/Bradenton Herald

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BRADENTON -- An internal audit of the Manatee County school system turned up an inappropriate reappropriation of proceeds from a 2009 bond issue, according to updates just provided to the Manatee County School Board.

It does not appear the funds disappeared, but bonded money was not properly accounted for and may have been deposited into inappropriate accounts, consultants working with Shinn & Co. LCC of Bradenton told school board members Tuesday.

Manatee County School District officials said it is too early to tell what effect, if any, the latest blow to the district's fiscal condition would have on the 2014-15 fiscal budget.

"It is apparent that transactions involving expenses and transfers to debt service being charged to fund 309 were made that do not appear to have been authorized," states the report authored by Steven Oscher of Oscher Consulting P.A. of Tampa. Fund 309 was used by the district to account for the costs to acquire, construct, install and equip the Series 2009 Project.

In 2009, a certification of participation was formed to fund three projects: an addition at Palmetto High School, work at Rogers Garden Elementary School and modernizing the transportation and maintenance facility at the Matzke complex. The certification of participation made $45.2 million available for these projects, according to the report.

Oscher officials found the projects used only $38.8 million leaving $6.4 million unspent, according to the report.

Bond proceeds can only be used for the projects specifically stated in the bonds, and the leftover $6.4 million should not have been transferred to other projects. Oscher reported the money was moved to fund projects at the Manatee Technical Institute campus on Caruso Road and at Myakka Elementary School, and to pay debt service.

Auditors are still looking for documentation as to how and when the money was moved and who authorized it. The transfers occurred when Tim McGonegal was Manatee schools superintendent.

"Details of the transactions in question have been communicated to Counsel for the School Board, and it is our understanding that they are currently being investigated," concludes Oscher's report dated May 6.

Board member Barbara Harvey expressed displeasure with the news, but said she was happy the money wasn't stolen.

"I've very pleased nobody pocketed money," she said Tuesday.

Board member Dave "Watchdog" Miner said his main concern is whether proceeds from other bond sales were similarly misused.

"I want to know what breakdown there was, which allowed this to happen," Miner said.

The school board is planning a special workshop June 23 on district bonds, Chairwoman Julie Aranibar said Wednesday.

"We need to know exactly where we stand," Aranibar said.

Superintendent Rick Mills said it is too early to tell if problems with the 2009 bond sale would affect the 2014-15 fiscal year budget. Mills said he is waiting for the internal audit to come back with more information and recommendations.

Previous audit findings have dealt severe setbacks to district budget planning.

State and federal auditors have ordered the Manatee County School District to restore about $7 million in funding it misspent in past budgets. Prior to the audit findings, the district projected an $8.2 million fund balance by June 30, its fiscal year-end.

The budget is still on track to be approved by the board in early September, said Don Hall, deputy superintendent for operations,. Hall said it is too early to tell if the newest audit report would affect the budget. Hall said district officials would be mindful of any potential ramifications from the findings.

"We'd obviously take that into account," Hall said. "At this point, we don't know what the effect will be."

Meghin Delaney, education reporter, can be reached at 941-745-7081. Follow her on Twitter @MeghinDelaney.

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