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Schools find more funds due to errors

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BY AMELIA HARPER
Staff Writer

Monday, November 11, 2019

NASHVILLE — During a presentation of a financial audit of the Nash-Rocky Mount school district, the auditor gave the Nash-Rocky Mount Board of Education bad news and great news.

The bad news is that a lot of accounting mistakes took place in the last school year. The good news is, due to a lack of understanding about how much money the school district actually had and subsequent frantic efforts to cut spending, Nash-Rocky Mount Public Schools has the healthiest fund balance it has had in years.

Dale Smith of the accounting firm Anderson Smith and Wike told the school board last week that it had an unassigned fund balance of $2,808,071 as of June 30.

“This fund balance is at the highest level it has been in the past five years — believe it or not,” Smith said. “Your unassigned fund balance is currently at 12.3 percent of your expenditures, which is very good. You were at 6.1 percent a year ago, which means your fund balance has roughly doubled.”

Smith encouraged the school district to keep the fund balance at that level as a hedge against emergencies and the vagaries of payments from the state and federal governments.

During the past school year, the school district operated with an interim chief financial officer after the former CFO resigned. Financial reports presented to the school board were bleak the entire year.

First, former Superintendent Shelton Jefferies told the school board in September 2018 that 13 positions, including several school counselor and social worker positions, would have to be trimmed from the budget. When the public balked at that idea, the matter was largely dropped.

However, in March, Jefferies came before the school board again saying that finances were so dire that teacher salaries would have to be trimmed for the remainder of the year.

Finally, to avert the impending financial crisis, Jefferies went to the Nash County Board of Commissioners and asked for an advance of $800,000 to keep the school district solvent. Nash County commissioners agreed, but with strings attached.

Throughout the year, teachers complained that they were not able to get access to basic supplies needed to teach. Many complained that they felt the problem was with management at the central office level rather than dwindling resources.

It turns out that was right.

According to the report issued by the auditor, there were several “material weaknesses with the accounting last year.”

First, the board approved an interim budget before the start of the 2018-19 school year but did not approve a final budget until June 3. Also, “due to an oversight by management, the board failed to include a budget for the federal grants fund in the budget resolution,” the audit report said.

Secondly, the school district reported expenditures within several funds that violated state law because they exceeded the amounts appropriated in the budget ordinance, the audit report said.

Also, “the district’s final budget balances reported in the June 30, 2019, general ledger were not in agreement with the balances per the board’s budget resolution,” the report noted.

In addition, the district was placed in violation of “various provisions of The School Budget and Fiscal Control Act.”

The audit report attributed these issues to poor management and lack of sufficient oversight.

“The budget resolution and necessary amendments were not prepared in a timely manner for the 2018-19 year due to a variety of reasons, including funding uncertainties and lack of proper management oversight of the budgetary process. Management with oversight of departmental budgets, along with finance department staff, did not properly monitor expenditures to ensure that budgets were not violated. In addition, amounts per the budget resolution were not properly entered into the district’s general ledger,” the report said.

The audit report recommended several changes, including better oversight of the budget by management and the school board.

Joyce Jarrett, the new chief financial officer of the district, said in the report that the issues are being corrected.

“The Board of Education will implement controls and procedures to ensure that the budget process is monitored more closely by management and the board,” Jarret said in her statement.

With an “all’s well that ends well” mentality, Smith said that he felt that Sheila Wallace, who served as interim chief financial officer last year, did the best she could under the circumstances but simply needed more knowledge and experience in the role.

“Ms. Wallace and the ladies in finance did their best not to spend any money. They were saying no to everybody because they did not want to end up in the negative. But they didn’t have enough of a grasp on where they were to say they were going to end the year with $1.4 million to the good. Unless you are familiar with school system finance and have gone through an entire cycle, it is hard to grasp,” Smith said.

The situation could have been far more dire, Smith said. As is stands, the school district is repaying the money to county commissioners and is in stronger financial shape than it was before.

“The good new is that, instead of having a deficit, you added to your unassigned fund balance,” said interim Superintendent Del Burns.

Burns also commended Wallace for her efforts.

“Sheila Wallace is smart and she understands finance,” Burns said. “Title 1 budgets are the squirreliest things in federal funding, and she has done a marvelous job with that. She stepped in a time of need and kept the district afloat.”

School board member Evelyn Bulluck said she has requested quarterly statements in the past and has had trouble getting them on a regular basis. She asked that the finance office keep the school board better informed with quarterly reports in the future so that they are not reliant solely on word of the finance officer and school superintendent when it comes to making tough financial decisions.

“When we were getting the report in the past, not all the school board members would look at it,” Bulluck said. “I think we as school board members have dropped the ball last year. We didn’t do our due diligence. But we learned this year — and we will be more diligent about doing what we are supposed to do.”

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