BRADENTON -- When did the former school superintendent know about the district's $3.4 million deficit? How did it occur?
Al Robinson, a director with Navigant, a dispute and business advisory consulting firm, took these questions from school board members and the public Thursday evening.
Last September, former superintendent Tim McGonegal resigned shortly after the announcement of the shortfall.
According to the investigation, there is no evidence of misappropriation or criminal acts.
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"It was a matter of flawed methods, failed systems and calculation errors," said Robinson.
The Navigant review found that the budget developed to manage funds was incorrect and understated with critical errors.
Spending on textbooks, the transfer of funds from the reserve to the general fund, a lack of understanding of the allocation worksheet, unbudgeted and underfunded programs, and salaries for additional teachers that were not included in the budget were all elements described in the forensic audit report as causes of the deficit.
Robinson went through the sequence of events leading up to the exposure of the deficit. In late July, McGonegal was informed of a concern about the numbers as the financial staff was closing the books. McGonegal thought that they could have possibly made the error of booking payroll twice.
On Aug. 21, they sat down and determined that there was a $3.4 million deficit.
McGonegal said he would issue a memorandum, and staff had high hopes of finding something specific to explain how that deficit occurred, but they did not.
In the recommendations made by Navigant, it was suggested that the budget has to be monitored throughout the year, and this did not happen.
"It's called checking the buckets," Robinson said.
School board member Dave "Watchdog" Miner asked if the shortfalls were a matter of gross negligence.
"It was like a perfect storm," Robinson said. "It was a combination of limited communication, software issues and changes."
In the 2010-2011 fiscal year, there was $24 million in federal funding that was cut in 2011-2012. That is a big number to overcome, Robinson said, although he does not see this as an excuse.
Robinson described the budget process as flawed from the very beginning. According to everyone he interviewed, district staff believed everything would be fine and the deficit was not being discussed. There was a clear lack of communication, he said.
Linda Schaich, an assistant to the CFO to the Boys and Girls Clubs Foundations, unveiled that there is a rule in place that prohibits district staff from talking to the school board in any way other than through the superintendent. She recommended the rule be changed.
"There were chronic problems of not budgeting and withholding information. You can't have more expense than income; the board had to be notified," said school board member Julie Aranibar. "A mistake is only OK if it is disclosed and corrected."
Aranibar said that the take-away from this is to put a system in place for this not to happen again and to hire competent people. She also said that there was a lack of checks and balances.
School board member Barbara Harvey's biggest concern is breaking the pattern of budget shortfalls.
"We cannot bring this money back, but at least I can rest assured it was spent on classrooms and textbooks," she said. "I would like to put this to bed tonight."
Robinson suggested that district staff was overwhelmed with requests and reports, but he doesn't excuse this as a reason for mistakes in financial management.
Robinson said there were two people doing budgets part-time under the guidance of former assistant superintendent Jim Drake, and these people had other duties such as cash management.
After the revenue shortfall in 2011, Drake told the board they would be informed moving forward so this wouldn't happen again at the following year-end. However, there was another significant lack of management oversight in 2012, school board chair Karen Carpenter said.
"Someone wasn't watching," Carpenter said.
Robinson said that if shortfalls are identified in the first six months of the year, decisions can be made more quickly to make corrective actions.
The school board recognized that they were not properly informed.
For example, they had no idea that McGonegal asked Drake to resign last March. They thought he chose to retire.
Another issue that Robinson identified was the elimination of a helpful software program in 2009. Position Control, a database that could take budget snapshots and compare compensation, was turned off.
This decision was made by the Manatee Business World Ownership Committee, chaired by Drake. This committee looks at district system requirements.
The new system, E-portal, had errors in basics such as addition and subtraction. The district has moved on to a new system, but Robinson pointed out that they could have gone back to Position Control, as it worked in the past.
Robinson recognized the efforts of allocation specialist Yoko Okanuma. Okanuma maintained the Position Control software and sat down with McGonegal to come up with solutions. She also kept detailed schedules and worksheets for Manatee County schools.
According to Robinson, if she had not continued to make those worksheets after Position Control was turned off, they would not have resources providing tracking the FTE reports for every school.
Pat Barber, president of the Manatee Education Association, says she is ready to move on with the lessons learned.
"We should never forget the lessons we learned from these mistakes. Unanswered question raised red flags, transfers made from the reserves to the general fund raised red flags," Barber said. "The superintendent cannot micromanage the budget. This is a school system. I am ready to start a new day with the new superintendent."