All findings of the SBOA audit team are presented to representatives of the governmental unit prior to publication of the audit. Any response to the findings by those representatives is included in the final document in the form of a letter attached at the end. This letter and its contents are not reviewed by the SBOA for the sense or nonsense of its contents; it is simply attached at the end.
I have previously noted how the audit found sloppy bookkeeping and the Administration response to that. Here I would like to focus on the audit findings that the district spent more money than the School Board appropriated and that the district overdrew several fund balances.
Here's what the audit says about spending more than was appropriated:
The records presented for audit indicated the following expenditures in excess of budgeted appropriations:
Fund Year Expended Excess Amount Debt Service 2008 $ 1,282,858 Transportation 2008 938,408
A similar comment appeared in prior Report B32087.
IC 6-1.1-18-4 states in part: ". . . the proper officers of a political subdivision shall appropriate funds in such a manner that the expenditures for a year do not exceed its budget for that year as finally determined under this article."
As noted above, the district spent more than the School Board appropriated in earlier years, as well. In fact, for the 4 years preceding the two years covered in this audit - I noted this in my blog entry "Decatur School Administration Broke State Law by Spending More From Funds Than Had Been Appropriated by Board" - they also over spent. The process of budget review and appropriation of money for specific purposes is a state mandated process intended to keep the review and expenditure of taxpayer money in the public eye. If, during the year, more money becomes somehow available, the district needs to go through the process for those added monies in order to spend it legally. Yes, it is a violation of state law to spend more than the School Board appropriates - but, unfortunately for the Decatur public, this is not unusual in our School District.
The SBOA had this to say about overdrawing funds:
The following funds were overdrawn at June 30, 2008: Debt Service, Retirement/Severance Bond, Local Rainy Day, Construction, Vehicle Repairs/Misc., Textbook Rental, Challenge Learning Center, DTEF Small Grants, GQE Remediation, Early Childhood Center Preschool, Star Grant/DCHS, DWD Biomedical Science Grant; Title II Part A, and Reading First 2008-2009.
The following funds were overdrawn at June 30, 2009: General, Debt Service, Retirement/Severance Bond, Special Education Preschool, Construction, Vehicle Repairs/Misc, Textbook Rental, IMI 2007-2008, Challenge Learning Center, DTEF Small Grants, Early Childhood Center Preschool, School of Ideas, Title I School Improvement, Title III English Lang. Acquisition, Title II, Part B Math and Science.
A similar comment appeared in prior Report B32087.
The cash balance of any fund may not be reduced below zero. Routinely overdrawn funds could be an indicator of serious financial problems which should be investigated by the governmental unit. (Accounting and Uniform Compliance Guidelines Manual for Indiana Public School Corporations, Chapter 9)
Now, I didn't go into it before, but this criticism was also leveled at the Decatur School District in the audit that spanned July, 2005, through June, 2007. At the end of the fiscal year (June 30) 2006, there were 7 funds overdrawn leaving a negative balance. At the end of fiscal year 2007 12 funds were overdrawn. And this audit reveals that at the end of fiscal year 2008 14 funds were overdrawn and at the end of fiscal year 2009 15 funds were overdrawn.
The response letter to this audit's findings was signed by Superintendent Don Stinson and the Chief Financial Officer signature is hard to read, but might be Robert Harris, Jeff Baer's replacement. The parts related to appropriations and overdrawn fund balances reads:
The records presented indicated expenditures in excess of appropriations. As a result of the mandated reassessment in 2007, Marion county has been woefully behind in property tax collections and distributions to the units of government. Therefore, the budgets for this audit period were approved by the State of Indiana over one year late. This means that the budgets for M.S.D. Decatur were approved after the year ended. Obviously, there will be overspending in some funds when the budget is approved "after the fact". Hopefully, going forward, Marion County property tax collections and distributions will be timely thus ending this issue.
Overdrawn Cash Balances;
There were overdrawn funds during this audit period. Once again, because of the 2007 mandated reassessment, Marion County was delinquent in their property tax distributions to the units of government. Even after excessive borrowing, there will be funds that are overdrawn because of late distributions from the county. As was stated above, the funds were received as much as one year late. Timely property tax collections and distributions from the county will remedy this situation.
It cannot be ignored that these two problems are chronic problems in the MSD Decatur Township and did not begin with the state mandated property reassessment ordered in 2007. More importantly, they attempt to lay the blame for these two problems on somebody else. So, lets look at their logic more closely.
The School District drafted a budget for the two fiscal years 2008 and 2009. They would have received guidance from the State Department of Local Government Finance for how much revenue to expect from property taxes - even though the property taxes would be collected late and sent to the district late. Using this guidance, the district not only knows how much to budget, it knows how much to borrow in a 'temporary loan' or 'tax anticipation warrant'. With all of that information in hand, the School Board appropriates the money that may be spent in each fund.
But, the district spent MORE money than the budget called for. That has nothing whatsoever to do with late property tax collections. They spent MORE money than the budget called for. The funds balances were allowed to go negative. They spent MORE money than the budget called for. It doesn't matter when the DLGF certified the budget - the budget was approved and the money appropriated by the Decatur School Board before they spent MORE money than approved and appropriated.
Stinson just wants to blame anybody else that he can. This excuse doesn't hold water.
Its just like when I asked about the temporary loan included in the retirement pension fund (see "And They Wonder Why...") and they said it was a coding error by the Department of Education, and after being called out on that statement by the DOE they blamed it on some person who no longer works for the District.
Its just like the former Concentra building. First the public was told that they weren't buying the building, just leasing some space. When pressed further, they said they were leasing to own, but it would be relatively inexpensive to turn it into an elementary school; that was the reason to buy it. Now we are being told that they can't think of selling the building even as they lay people off, because the economy is sour. When the solid truth all along has been that Stinson and his cronies don't want to be in their tiny offices in their tiny Central Office; they want to move into the fancy building across the street and impress people.
It is just one thing after another with this Administration. And they always have a poor excuse or have somebody else they would rather the public blame. Well, I don' think the public is buying their excuses and finger pointing any more. The SBOA audits have provided us with enough concrete information to know that it is time for a change in the way this School Board and the Administration do things.