Grand Jury Releases Report on School System Financial Woes

The Stephens County grand jury says it believes a combination of leadership missteps and external circumstances resulted in a loss of management control resulting in the financial problems now faced by the Stephens County school system.

However, the grand jury also says it finds no evidence of fraudulent activity connected with the school system’s financial issues.

The grand jury released its final report on its investigation into the finances of the Stephens County school system Tuesday.

In its report, the grand jury stated a number of findings and conclusions and then made recommendations.

The grand jury concludes that the Board of Education depended too much on the Superintendent and the Superintendent depended too much on the Finance Director for the oversight of the finances.

Grand jurors also say that too much responsibility and control resided with the finance director, adding no one else in the system had sufficient knowledge to understand what the finance director should have been doing and there was no backup for the finance director.

The grand jury says it found that based on information in the 2013 state audit, general ledger reconciliations with the bank accounts ceased in October 2012 and did not resume through June 2013, adding that other financial management duties were not performed on a timely basis or not done at all beginning in October 2012 and continuing thorough January 2013, prior to former Finance Director Annah Dodge’s resignation in February 2013.

In both cases however, the grand jury says no explanation was provided or found for these occurrences.

According to the grand jury, that problem was then perpetuated by the hiring of two finance directors after that who did not have the experience to get the problem back under control.

The grand jury notes that there is no certification or training required by the state or county for school system finance directors, while saying that finance in education requires specialized knowledge because of multiple revenue streams, special programs, and government requirements.

The report then says the grand jury feels former School Superintendent Sherrie Whiten did not communicate the severity of the financial problem to the school board and did not take the proper steps to take the matter to the state level, resulting in a “grossly inaccurate” 2013-2014 fiscal year budget.

Grand jurors then conclude that because school board members were concerned about micro-managing, they were hesitant to ask questions, and were not monitoring numbers like the fund balance in 2013 and early 2014 through financial reports that were too detailed and lacked summary information, adding the school board lacked ownership and understanding of the financial position of the school system.

The grand jury does say that when board members did question administration in 2013 and early 2014, they were told everything was “okay” and all board members stated they thought everything was good with the finances until they found out from new School Superintendent Bryan Dorsey about the issues.

According to the grand jury, an incorrect fund balance led the school system to spend money it did not have.

In the report, the grand jury says state auditors testified that while there were many inaccuracies and evidence of lack of oversight in the 2013 audit, all cash balances from the clean 2012 audit were accounted for in 2013 and no actual money was missing after all reconciliations were done.

Also, state auditors told the grand jury nothing found in the 2013 audit indicated fraud.

In their report, grand jurors do say they believe state funding cuts were a contributing factor, but not the only problem to some of these problems.

Based on these findings and conclusions, the grand jury offered a host of recommendations and requested a corrective action plan from the school board for the short and long term to make sure these issues are addressed.

They include things like calling on board members to take more ownership of and responsibility for the school system’s finances to include a full understanding of the numbers and close monitoring of financial performance; having staff provide monthly reports to the school board that clearly show the fund balance and other important financial performance measures; requiring school board members, the superintendent, and the finance director to receive annual training on topics like school system financial management, creating an open line of communication between the board and the superintendent on the finances; cross-training someone, like an assistant finance director, to perform the duties of the finance director when needed; requiring the finance director to be certified and have a clear understanding of expectations from the state, local school board, and superintendent, and requiring the superintendent to have a clear understanding of the duties and performance of the finance director.

Also, the grand jury requested that the school system’s audit take place for Fiscal Year 2014 this month, noting that further inaccuracies are expected in Fiscal Year 2014 financial statements.

State auditors also recommend additional training for the school system’s financial staff, working with personnel at other school districts to mentor Stephens County personnel, seeking assistance from the state Department of Education, and from state auditors.

Grand Jury Report on the Stephens County School System’s Finances