The outside investigation into financial mismanagement within the Manatee County school district substantiated earlier findings from the administration's own discovery process, launched soon after a $3.4 million deficit became public knowledge in September. In total, administrators failed to account for about $11 million in spending in the 2011-2012 budget.
The independent probe, though, is a scathing indictment of a district administration unable to cope with mounting pressures and flawed accounting practices.
While the lion's share of the blame is falling on former assistant superintendent Jim Drake, no administrators alerted the board or the public to the dire financial straits as the flames burned out of control for months. In fact, one fund shift kept the board out of the loop. This lack of accountability is disturbing -- and a major part of the public's distrust in district leadership.
The Navigant investigation, issued Monday in a 200-page report with the first 39 pages outlining the forensic auditors' findings and conclusions, cites incompetency as the cause -- with no illegal actions. The lack of criminal intent is welcome news.
But several major questions remain unanswered. The school board instructed investigators to decline to reply to any at Monday's meeting and wait for a later date. That should come soon.
The report cited 11 factors contributing to the deficit, including:
n The employee compensation budget was based on a flawed methodology connected to a defective software program, which then forced staff to turn to a manual method that produced errors in salary projection worksheets for 17 of 18 schools. Drake was responsible for switching from a reliable database that tracked salaries and benefits to the flawed one.
n In February 2012, Drake tried to correct previous mistakes in compensation and other major expenditures not budgeted by borrowing $6.9 million from the employee benefits fund, which usually showed surpluses that the district tapped in the past.
But that account could not be drawn on, so Drake turned to the compensation fund. Investigators concluded he should have withdrawn reserves; that would have alerted the school board of the financial mess. Instead, it remained solely within the district's administration.
More troubling is that not a single monthly financial statement to the school board from August 2011 to May 2012 revealed any budget shortfalls.
n The original budget did not budget for 15 new teachers hired to comply with the state's class-size requirements.
n Nor did the budget account for several major programs, including about $1 million for Manatee Technical Institute.
The incompetency becomes clear in several of the other factors the report cites:
n Failure to establish and maintain detailed procedures for budget preparation.
n Failure to conduct detailed budget analyses throughout the year.
n Lack of adequate staffing and automated systems in the budget process.
n Lack of adequate management support, oversight and leadership in budgeting.
Drake failed to conduct the basic checks and balances that would have uncovered budgeting mistakes earlier, telling investigators he was frustrated by the time-consuming workload from all his various responsibilities as assistant superintendent. That points to a management problem.
One of the more unsettling issues is one time line. Former Superintendent Tim McGonegal, who resigned in September shortly after the deficit became public, requested Drake's retirement in February 2012 over ongoing budget errors. McGonegal, the district's former financial chief, then assumed responsibility for the budget. Officially, though, McGonegal did not learn of the financial disaster until five months later, in July. That simply does not compute, even with investigators saying there is no evidence that McGonegal manipulated the release of information on the deficit.
The Navigant investigation does not outline who knew what and when either, an important piece of accountability that should be forthcoming.
The document does offer eight recommendations to put the district on track to a strong accounting system with more frequent and detailed financial reports to the school board -- and thus, the public. But with the call for additional staff and new computer software, these will come at a cost at a time when austerity is the prevailing trend.
Interim Superintendent David Gayler pinpointed the overall problem in a press conference after Monday's meeting: "We had internal controls that were missing."
We're confident that will be corrected. But moving forward, more questions need answers.