State audit faults Commerce School System spending

Federal law says that school systems receiving federal funds for students with disabilities must expend on those students an amount each year at least equal to the amount spent the previous year. That is referred to as “maintenance of effort.”

Commerce did that in the FY 10 budget, but the problem arose when it used American Recovery and Relief Act (ARRA) revenue to do so — with the prior approval of one state Department of Education official.

The state auditor ruled otherwise, and when some $120,000 in ARRA funds were backed out, declared that the system missed the maintenance of effort requirement by almost $68,000.
In theory, the school system could lose federal funds for that discrepancy, but the system is contesting the finding.

“They told us to use ARRA against salaries and benefits or either salaries or benefits,” Stokey said, adding that the Department of Education’s budget people “say we can” use that money for special education while “the auditor says we cannot.”

The school ended the fiscal year about $200,000 in the red, which it covered with reserve funds. That was a lot better than budgeted, Stokey pointed out.

“We expected to use $550,000,” she said.

That’s an increasingly familiar scenario as school systems grapple with declining revenue by tapping any reserves and/or cutting staff. So far, McCoy noted, the Commerce system has not had to lay anyone off, thanks to timely attrition.

The audit found fault in other areas as well, including how Commerce High School handled certain payments outside of its payroll system.

One faulted the system for reimbursing staff for purchases without using a purchase order system. Another pointed out that some payments to personnel for extra work — from working gates at athletic events to driving school buses — were not paid through the payroll system, which means the income was basically tax-free. Instead, they were paid by the athletic department or a principal.

Those issues were long ago resolved, according to McCoy.

“When they (the auditors) were here and said this would be a finding, we made the changes,” he said.

In addition, a review of compensation to paraprofessional personnel noted differences between what the people were paid and what their schedules — made early in the year — suggested they would earn. That was a result of principals not forwarding updated schedules as the schedules evolved during the school year, Stokey said
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“It was all legitimate,” she said of the paraprofessionals’ pay.

The auditor also faulted the system over 10 journal entries not signed off on by McCoy. That, said Stokey, was a result of her mistakenly putting them in the ledger for the previous year.
“There was no discrepancy. They just didn’t have a signature on them,” she said.

Other Findings

Other findings included:

•that the school system failed to adequately maintain records of its capital assets. In one case, the system did not have serial numbers recorded for pieces of equipment. In another, the system forgot to subtract from its list of assets the square footage for two classrooms demolished for the CHS construction project.

•compensation of $56,580 for a school nurse was not reported on the detailed listing of salary and travel submitted to the Georgia Department of Audits and Accounts. “That was my fault,” Stokey said. “I coded it incorrectly.”

“We got right on these,” Stokey said of the audit findings. “The only thing we have no control over was the maintenance of effort.”