Springfield Public Schools passed its recent financial examination by the state auditor, but the grade handed down leaves much room for improvement.
At the March 27 school board meeting, administrators will outline how the state’s largest accredited school district is addressing each of the 51 recommendations unearthed by Missouri State Auditor Tom Schweich’s office.
This month, Schweich released the results of an 18-month review of the district, a process requested by more than 5,000 registered Springfield voters. The auditor’s office found the district’s management of taxpayers’ funds was “fair,” the second-worst rating in state audits.
SPS Board of Education President Tom Prater said officials have been preparing a flow chart to detail the audit issues that have been fixed and the problems left to tackle.
District officials in December received a preliminary audit, and Prater said they quickly got to work addressing concerns named in the March 2 final report. Prater said during the March 27 school board meeting, administrators would present the flow chart to the board. “Probably the No. 1 priority in board members’ minds is the internal auditor position,” said Prater, a partner in Mattax Neu Prater Eye Center.
Lack of an internal audit function was one of 14 areas of concern identified in the audit, which also said the district did not follow up on many recommendations made by the former internal auditor, such as maintaining monies collected in a secure location. SPS has not filled the internal auditor position since Tina McManus left in 2008.
“We almost filled that position a year ago, but we had a $3 million revenue cut from the state, and at the same time, we asked the administration to cut $1 million in administrative overhead,” Prater said. “We felt like the primary place to use our resources was in the classroom.”
With lawmakers in Jefferson City proposing a record level of K-12 funding for fiscal 2013, Prater said he’s confident the position would be filled soon.
District officials have rebuffed criticism of their handling of the sale of the former Hickory Hills school property.
The audit points out the district had only received $97,500 of the $4.45 million purchase price to developer Paul Larino, as of Dec. 31. Larino bought the 46-acre property with the intention of developing Hickory Hills Marketplace.
“Despite the buyer’s failure to make required payments and meet other contractual obligations,” the audit reads, “the district has entered into multiple agreements to extend the buyer’s obligations to later dates.”
Prater said the audit remarks do not factor in all of the outside circumstances.
“The Hickory Hills school sale continues to be a thorn in our side. It is a very complicated issue with the city, the county, the Missouri Department of Transportation, two adjacent landowners and the developer – and the jigsaw puzzle is slowly falling into place,” Prater said, describing the deal as the hardest external issue the district has dealt with during the last three years. “It would be difficult to pull the rug out from under the buyer, and even more difficult to find a new buyer in this economy.”
Among the problems Prater said the district already has worked to fix is the $3.3 million shortfall of its Health Benefit Trust Fund. The audit noted the self-funded medical plan’s reserve balance of $4.47 million in 2009, and it cited inadequate funding and monitoring of operating costs for the financial reversal. “In 2007, there was a $15 million balance,” Prater said. “The board felt that was inappropriately high … so we increased benefits to staff.”
Prater said the board in January elected to decrease benefits for family care to start to turn around the funding shortfall.
As another fix, he said the board plans to formalize a legal services contract. According to the audit, the district spent $596,104 for legal services 2009–11. Attorney Ransom Ellis of Ellis, Ellis, Hammons & Johnson PC has performed legal work as needed for the district for nearly 30 years. Ellis noted, however, that he’s not the only attorney at his firm that has worked for the district. He said his firm handles roughly 90 percent of the district’s legal services needs.
Ellis said he has served several school districts through the years and routinely works for as many as 10 districts, all without contracts in place.
“My position with the district has always been that I think they are better off without a contract, but that’s up to them,” Ellis said. “If the district becomes unhappy with me, if we have a contract, it doesn’t have a whole lot of choice until the end of the contract.”
Prater said the board will determine a process for selecting a legal services provider and the terms of a contract.
Among other findings, the auditor’s office found SPS overspent proceeds from the 2006 bond issue by $1.84 million, change orders were not handled properly and safeguards were not in place to ensure prevailing wages were being paid. In addition, the report called for improvements in the district’s handling of meal, student activity, athletic event, and concession receipts. Also, SPS does not adequately segregate accounting duties or maintain sufficient records of monies received, the report said.
According to he 69-page report, the audit is not designed to be a full evaluation of the district, but rather to uncover issues with financial controls. Prater said taxpayers should be buoyed by the things the district has been doing correctly. “There was no fraud, no embezzlement and no theft found,” he said, noting when auditors discovered proper controls in place, they moved on to other areas.
Now that the audit is complete, the district has to pick up the $180,000 expense. Prater said while he believes the changes SPS will make in response to the report would result in savings, it is too soon to say if it is enough to recoup the costs.
