By TARA HETTINGER
Nearly a year after it started, the Indiana State Board of Accounts has released the audit on Greater Clark County Schools that was initiated after the SBOA received a call requesting it to investigate.
The audit states that district officials asked them to examine a number of issues, such as the dramatic drop in the general fund�s cash balance, which fell from $23.6 million in 2001 to $6.3 million in 2008, possible violations of the school corporation�s travel policy, significant noncompliance with state statutes and school board policies and more.
Paul Joyce, deputy state examiner with the SBOA, said his office started the investigation in February. Greater Clark Assistant Superintendent Travis Haire, who was the interim superintendent at the time, said that he was the one who made that call.
�They weren�t tipped off,� Haire said previously. �Any time there was a situation involving a CFO � any time � the responsible thing to do is to make them aware of it, and I�ve made them aware of what�s going on.�
Haire referred questions about the audit�s results to the district�s chief financial officer, Frank Collesano. Collesano replaced former CFO Mike Hodgson, who was put on paid leave in February for months before finally being fired by the school board, which later retracted that to allow him to resign. No reason was ever announced.
ISSUES FOUND
The 19-page audit analyzed a number of issues, such as mileage being paid to some workers to drive from home to work, a board member not paying delinquent bills on building rentals and the need for more internal controls over financial transactions and reporting.
The report states that the mileage issue mostly involved two cafeteria managers, which Hodgson was in charge of as the CFO/cafeteria director. It also included eight other employees who were paid mileage to drive from home to work.
The total paid during the audited period, which covers July 2007 through June 2008, was $1,125.18 for the two managers. The total for the other eight was $165.56.
�Reimbursed mileage shall not include travel to and from the officer�s or employee�s home and the governmental office in which he works, unless otherwise authorized by statute,� the audit said.
As for delinquent bills on building rentals, the audit shows that eight notices were sent to Robbie Valentine, school board secretary, to pay four bills, totaling $1,280. The earliest unpaid one was dated April 2, 2008. It said that as of Oct. 8, 2009, all the delinquent bills remained unpaid.
�The [school board] policy also authorizes the denial of facility rentals to renters who have past due accounts in the two years prior to the application for facility rental,� the audit said.
The audit also said there�s a need for more control activities at various levels to make sure the financial reporting is correct.
�The failure to establish these controls could enable material misstatements or irregularities to go undetected,� it stated.
It said that no controls were in place to adjust or correct transactions where someone outside of the person who entered the initial transaction would double-check. The audit stated that deficiencies were noted in the central financial office as well in the individual school buildings.
The audit also stated that no documentation exists indicating verification of amounts invoiced by vendors with the amounts per bids or quotes received. It went on to say that the district does not have a policy in place to follow up on delinquent payments for transfer tuition and kindergarten fees.
More issues found in the audit can be found on www.newsandtribune.com
MISSING CASH BALANCE
About 90 percent of the general fund is dedicated to salaries and employee benefits, the audit said. That�s the fund behind the cash balance drop from $23.6 million to $6.3 million during the course of 7 years.
The audit pointed to responses from Hodgson and Tony Bennett, former superintendent and now state superintendent of public instruction.
Bennett said decreases in state funding, inconsistent tax collections, implementation of full-day kindergarten, use of block scheduling and other factors contributed to the drop.
The audit also mentioned a presentation Hodgson made to the school board, which talked about teacher salaries being higher than state average, low student-to-teacher ratios, employee benefits and more all pushed up the district�s costs, thus lowering the cash balance.
RESPONSE
Superintendent Stephen Daeschner wrote a response to the audit, which is included in the report. He highlighted the issue with Valentine being behind on his bills.
�My understanding is that Mr. Valentine owned a basketball-retrieving machine. The previous administration and Mr. Valentine had a verbal agreement that the rental expense that Mr. Valentine occurred was off-written by the cost of the basketball-retrieving machine that is now in GCCS possession,� Daeschner wrote. �At first it was believed that the machine was lost or stolen. [On Oct. 14, 2009] the machine was identified and resides at Charlestown High School. We have contacted the manufacturer of the �shoot-a-way� and a 7-year-old unit is worth approximately $1,500.
�My conclusion is this matter has been resolved to our satisfaction and that the machine expense is of approximate value to the rental Mr. Valentine owes.�
Bennett said no such deal existed with Valentine during his time at Greater Clark, which was from late June of 2007 to December 2008.
�There was never any agreement with me,� Bennett said, adding that delinquent notices were sent during his time as superintendent and that if there was an agreement, those wouldn�t have been sent.
Bennett said he had been approached by Valentine and was told the basketball machine that Valentine put in a school was missing. He said Valentine asked to be reimbursed.
�The guidance I received from the State Board of Accounts was that we couldn�t reimburse him for it,� Bennett said.
Bennett said he didn�t know about the mileage issue, but added that he did know about the financial situation Greater Clark was in. He said that�s why when he took the job at the district he quickly implemented a plan for expenditure reduction, which included offering retirement incentives to teachers and eliminating some para-educator positions.
�I do know we were very clear during my administration with the board about the cash balance situation and the steps we needed to take ... to turn it around,� he said.
In a written response included in the audit, Hodgson said he�s unhappy with the �accusatory tone� of the audit as well as factual errors and omissions.
�Each year the board, superintendent and public was warned that the school corporation was spending more than it was receiving,� Hodgson wrote. �Decisions that were made that led to the decline in the cash balance were made with the knowledge and approval of both the school board and the superintendent of schools, Tom Rohr. My warnings and the consequences of those decisions were dismisses as being overly pessimistic, or that the state would increase our funding (particularly with regard to full-day kindergarten).�
Calls seeking comment from Daeschner and Marty Bell, chief operating officer, were all referred to Collesano.
�I�m not going to get into who�s wrong and who�s right,� Collesano said when asked about what the audit showed.
However, he said he does believe in what Bennett said on how the cash balance dropped so quickly. Collesano said the district is planning more cuts, to help remedy that further, which involves having less teachers.
�We�re trying to get closer to the state average [student-to-teacher ratio] mainly for money reasons,� Collesano said.
He said another big hit to that cash balance has been increasing health insurance costs. He said it went up about $1 million to $10.7 million a year since July.
However, he said he can�t say whether Hodgson provided enough warning to the board and superintendent, since he wasn�t there. He also stated that he does not know why Hodgson was put on leave and later let go.
Though he did say there are some things he wouldn�t have done, such as the mileage reimbursement. He said he would have also dealt with the Valentine situation differently.
�That�s not to say they were wrong. I don�t know what the circumstances and agreements were,� Collesano said.
As for the mileage, he said he sticks to policy, which only allows those traveling from a worksite to a jobsite to get reimbursed. He also said policy will be followed when dealing with building rentals.
�He has to pay his bills,� Collesano said of Valentine. �He�s like any other person in the community.�
Collesano said if bills aren�t paid in the future, policy will be followed and Valentine will be denied building rentals.
Collesano said he is also working on creating more controls within the financial department. He said he�s discovered that check numbers weren�t being used, which is something that is being changed so that they can more easily keep up with transactions. He said the district is also making sure it has the correct number of employees per positions and not more people than it has jobs.
