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Florida report: School district misused funds

By Staff | Feb 17, 2009

A report released by the Florida Auditor General this month found a significant deficiency in how the Lee County School District manages funds from ad valorem taxes, something that may cost the district money unless a bill can be passed that expands the definition of capital expenses.
State law requires the school district to use ad valorem taxes for capital outlay projects or purchases including construction or maintenance, but according to the audit in 2005 to 2006, the district took money from its capital account to cover its $19 million computer upgrade.
Florida statutes contend that computer software purchases are not listed under allowable capital purchases, although in October 2007 the school board approved purchasing the software, as well as paying for personnel time and consultant costs with the funds.
As a result, the school district may lose $3.6 million from its operation account — used to pay salaries and everyday operations — to make up for the difference in capital outlay.
According to the state’s finding, “A district that violated these expenditure restrictions shall have an equal dollar reduction in funds appropriated to the district in the fiscal year following the audit citation.”
The potential loss of an additional $3.6 million could not come at a more difficult time for the school district, which has been struggling to offset budget reductions expected to reach as high as $70 million in 2010.
Superintendent James Browder sent a reply to Auditor General David Martin stating that Florida statutes are not clear in their definition of “equipment” as related to capital outlay expenses.
“While we respect the auditor’s authority to interpret statute and examine our financial records according to their interpretations, we do not agree with the finding related to our two mill funds,” wrote Browder.
School Board Member Robert Chilmonik said the $3.6 million loss could be devastating on top of other anticipated losses. He said the results of the report stress the importance of independent oversight.
“The audit report really shows the importance of having independent oversight along with internal audit functions to ensure taxpayer dollars are being spent wisely,” said Chilmonik. “It is my hope we will receive legislative relief or some kind of waiver from the state DOE.”
Board Vice Chairman Steve Teuber said the audit was conducted after the state’s language was changed at the last minute. He added that Sen. Garrett Richter, R-Naples, has filed a bill that would change the state’s definition of capital expenses to include the software.
“We used capital funds to buy software and we got tacked on it for an audit because the language got changed,” said Teuber.
Teuber said the $3.6 million would not be transferred if the bill passes through the Legislature in March, but he agreed the loss would be devastating to the district in the current economic climate.
The school district’s operational audit, also carried out by the Auditor General in November, found no significant issues. Some of the findings included the timely terminating of IT access to former employees, expansion of lottery fund appropriations and improvements to reporting contact hours for adult general education.
In January, Chilmonik sent a letter to a number of state officials outlining what he perceives are inconsistencies in how the district conducts business. He asked the auditor general to look over some construction projects in the district’s Master Vendor System.
On Feb. 3, Sen. Michael Bennett communicated to Chilmonik that his letter and backup materials are being forwarded to the Joint Legislative Auditing Committee for consideration.
The Office of the Chief Inspector General and Attorney General responded to Chilmonik that they did not have the jurisdiction over the matter.