Report No. 2009-73
Complete Audit Report
Jennings School District audit findings
The financial condition of the district has declined in recent years, with the operating funds balance declining $12.6 million (56 percent) from the beginning of fiscal year 2005 through 2008. Operational disbursments exceeded receipts every year for the past 4 years by an average of $3.1 million per year. Several factors which contributed to this situation are noted in the audit report. We recommend the School Board closely monitor the financial condition of the district and take appropriate action to ensure the long-term stability of the district's financial condition.
Hand-Held Computer Project
The district spent a total of approximately $1,254,000 to implement a hand-held computer project, including 2,572 hand-held units, cases for the units, wireless keyboards, other equipment, classroom modifications, and software training sessions. The project significantly exceeded its budget, was not properly bid, was mismanaged, and the usage of the units is low.
We recommend the School Board evaluate whether to continue with the hand-held computer project. If the program is discontinued, proper disposal of the units should be considered. In addition, the board should require documented cost/benefit analysis for future large scale projects and require competitive bidding for goods and services.
Administrator salaries increased by a total of approximately $988,000 from fiscal year 2006 to 2008. The increase is primarily due to the creation of nine administrative positions. In addition, the severance package paid to the former Superintendent appears excessive. The board agreed to pay $238,817 to buy out the remainder of the contract (through June 2009) and to pay $10,892 for her and half of her spouse's health insurance through June 30, 2009. The contract with the former Superintendent did not specify any severance conditions. The $500 monthly car allowance included in the current and former Superintendents' contracts also does not appear reasonable.
We recommend the School Board evaluate the current administrative salary structure to determine if costs can be reduced to more reasonable levels and ensure future employment contracts contain reasonable severance conditions.
Several purchases were not competitively bid or competitive requests for proposals were not obtained. In addition, the district has incurred significant costs to purchase, renovate and operate a new alternative high school building. The board also approved the purchase of an empty real estate lot next to the Central Office for $172,500. Documentation in the board minutes contained no stated purpose for the purchase and as of February 2009, the land was unused. Mowing services costing $4,410 appeared unnecessary and/or unauthorized. Documentation of change orders for several projects was not maintained by the district.
Accounting Procedures and Controls at the School Level
There is a lack of district-wide policies and procedures related to the receipt and disbursement of monies at the school level. Monies collected and disbursed at two schools are not reported to the Business office or the state. Procedures for receipting and depositing monies and maintaining petty cash funds need improvement. In addition, security officers and custodians working athletic events at the high school are paid in cash and the payments are not reported to the Internal Revenue Service. Invoices for student activity account disbursements are not submitted to the Business office before payments are made.
Cellular Phone Use and Controls
The district does not have a written cellular phone use policy and weaknesses exist in the district's controls over the use of its cellular phones. A list of district-owned cellular phones, showing each number and the person assigned the phone, is not kept up-to-date. For the year ended June 30, 2008, the district paid $32,500 in cellular phone charges for 60 phones.
Business Office Accounting Procedures and Controls
Improvements are needed in the Business Office's accounting controls and procedures. Prenumbered receipts slips are not issued for all monies received and deposits are not made on a timely basis. The petty cash funds have excessive balances and are used to pay for items which should be purchased through the normal disbursement process. Procedures have not been established to routinely follow up on outstanding checks.
Computer Controls and Emergency Plan
The district's computer and data controls need improvement. Access to computer systems and data is not adequately restricted to only authorized users. Backup disks of information used to provide a means of recreating destroyed master disks are not stored offsite. The district does not have a formal emergency contingency plan for its computer systems.