Legislative Joint Auditing-Educational Institutions

I won't go into what they are maybe Patrick Mister new well tell us what they are ones Henderson and. Maybe Floyd Tellem since I brought of the yet tomorrow the Henderson state audits for the two thousand eighteen and two thousand nineteen were combining knows they're two separate reports what we're going to combine them into one presentation and then as well there was a a review that we did for the Arkansas school FOR math and sciences and that'll be presented tomorrow as well so as education audit committee members you need to be there you've got a a basic knowledge of what we're hearing there so all right let's go ahead call to order Dobson of the minutes I need a motion to approve the minutes I've got a motion I need a second as the Representative fielding with the motion represented Fortner with the second all in favor of accepting say aye. Same side opposed hearing none that amount adoption of the minutes is passed and with that I believe Mr co chairman do you have anything. No Sir all right everyone welcome okay let's jump right into their review of the reports items the do we have folks from pine bluff school district of Jefferson County here could we maybe have you come to the end of the table we will read the findings the typical process here for the entire audience is we will introduce the folks involved and then we will read the findings in total and the chair will can ask for questions as we go through each each finding so perhaps if you could introduce yourselves in what capacity use that at the end of the table for the committee please yes senator good afternoon Jeremy of public school district superintendent. Afternoon leroy here is public school district chief operations officer Cindy Smith and department of education fiscal services and support. Mr or will that I get that right only try to dress everybody correctly or what hello okay. Okay Mister Patrick new would you please read us all of our findings and we will have him read the findings and for this one since we've got a few extra what we will probably do is the chair will probably divided into like findings of what you'll find out that finding one and two are similar in nature for questioning items three and FOR similar in questioning type things and then item five finding five so let's read them all though now. Thank you Mr chair The first started as we said was Pombal of school district there're classified AS being in fiscal distress and they are so when state control in this is been effective in since September thirteenth two thousand eighteen. The first finding. The district internal control system did not prevent or detect material errors in the financial accounting records which are utilized to prepare the district's financial statements. In the special revenue fund significant errors included the understatement of accounts receivable and accounts payable due to on recorded a cruel seven hundred seventy seven thousand and sixteen thousand respectively. And the understatement of federal assistance revenues in the amount of one hundred eighty six thousand due to the un recorded value of commodities received in the child nutrition programs. Additionally federal assistance revenue was understated fifty six hundred dollars due to miss classification of revenue receipt. Finding to is also a misstatement finding the district's internal control system did not prevent or detect significant errors in the financial accounting records which are utilized to prepare the district's financial statements. In the general fund significant errors included property taxes were overstated by one hundred forty six thousand due to the recording of duplicate receipts. And accounts receivable and accounts payable were understated by one hundred eleven thousand and seventy nine hundred respectively due to on recorded a cruel. In addition miss classifications totaling two hundred ninety six thousand were identified. On the next page we have finding three which is a repeat finding. The district could not account for eight of twenty two child nutrition equipment items totaling eighteen thousand nine ninety nine a special additionally one audit your equipment purchase of thirteen thousand eight hundred and seventy one was not recorded in the districts equipment subsidiary ledger and a similar finding was reported in the previous audit. Finding for. In our sample of pyro expenditures we identified an allowable costs toting thirty one thousand seven hundred and TN. There were paid from the title one program which consisted of undocumented hi Rohit pyro expenditures. On the next page finding five is a repeat finding. Our examination of bank reconciliations and testing of receipts rebuild the following and I'm just going to hit the high points of of the because there several bullets there the district operating bank account was not reconciled from July twenty eighteen three June twenty nineteen with variances ranging from eighteen hundred dollars to eight hundred thousand dollars. In testing outstanding checks the following discrepancies were identified. Twenty six checks totaling one hundred twenty thousand cleared the bank prior to June thirtieth there remained on the outstanding checklist. Three checks totaling seventy four thousand were voided in the prior year but remained on the outstanding checklist. One check totaling six seven hundred seventy eight thousand was issued and boarded in June but remained on the outstanding checklist. And also some out but old outstanding checks were included on the outstanding checklist. Three duplicate receipts were posted to the general ledger. we'll skip over some of those. The check. Cash check composition were not always indicated on correct or correct on receipts. Receipt numbers applicable to the deposit were not always indicated on the deposit slips. And a receipt in the amount of fifteen hundred dollars was issued in error and I similar finding was issued in a previous audit. And that's the findings for public school district thank you Mr Nate as we go forward committee members you all have their response and in visiting with audit staff this morning about all of this the reality of it is what we're here to do is make sure it doesn't occur again they to their credit fixed all of that out as my understanding is that correct. yes well all may we proposed adjusting entries to the district and I approved and there was improved willingness to fix what they found that is wrong but I think for question purposes to the committee I'm gonna ask you to focus questions beginning with finding one and two because of their similarity so let's focus first on those to do we have questions from the the committee members pertaining to finding one and finding to under the pine bluff. Report. senator Chesterfield. Thank you Mr chair in good afternoon are you got it my concern is this the status has taken over the prime love school district. What assistance is a state giving you to make sure that these kinds of things don't happen anymore because it's not as if this is a school board decision or any of that kind of thing you are there as the employee of the state of Arkansas to make sure that the fiscal condition of pine bluff stays or should become that's a that becomes by the fission system that we know it can be. So what assistance is the state giving you to facilitate this happening since it is under state control. Senator Chesterfield thank you for that that question I will tell you and Mister Harris could elaborate a Mr Mrs Smith as well that Mister Harris works very closely weekly with the fiscal services from Arkansas department that several of the findings we were working on to make sure that we build the capacity of personnel members we have in the district who were under the previous administration as well and so is changing their practices but also making sure that we have internal control at each level at his level Mr Harris's level but as well as my level and Mrs Smith along with additional staff members have worked with us to make sure so it's a lot of cleaning up that we we we're currently doing to ensure that you do not see these findings nor the two of us before you again so. Of. Is there one on one are you from the state board of education and what are you doing tell me specifically so that I'll feel better about on the so and with fiscal distress districts they submit that request for their purchases now so we review the coating before it's put into the system and then Mister Harris comes usually to our office once a week and we review and what we call our a a for exceptions reports so we look at fairs that are that are popping up with the finance and we're showing him how to correct those were working with him on reconciling the bank statement I will say one of the issues with the bank statement was the electronic check clearing the a system that the bank since to him was not working properly so it was not always clearing the checks and he didn't have the staff that understood how to go through and check and make sure that everything was clean properly so we're going to that he's working with the bank to get that system in place so now we're back tracking to try to clear things that had not cleared so that's outstanding checks so we can get to a balanced that would be zero. Last question Mr chair much of. What we report comes from the local school. What training we giving to those individuals who are responsible at the little most local level the school itself because I know got dole was working state department parity is as well one of we don't want to train the individual for usually underpaid. And sometimes not as qualified as we'd like them to be because we they have not received that training what are we doing to make sure that they are providing us with the basic information so that it's when it's bad into the district at the district level and on to the state level that everything we have is accurate. One of the practices that we've been going through here most recently at their last quarter quarter and a half is a weekly review in each of the areas payroll revenue in accounts payable just looking at what's actually going into the system house being recorded balancing that against best practices and then I guess we feel quarterly boot camps with the eighty staff just to kind of get in with everyone in the same room at the same time just kind of determined from a group standpoint Hey this is going on here this is going on here what we need to do what we need to do differently so that those of the the practices that we've implemented over the last two quarters three quarters two to address by several of the issues here as it relates to staff capacity Senator I just feel I will also at that a lot of the transactions most of transactions occur at the district office so at the school level is mostly accounts receivable receipts for activities or fund raisers but that's deal receded at the district office so most of the training and professional learning will take place with the staff at the district level no Mister Harris does hold an annual training with our administration at the school level to cover five finance or funding procedures the appropriate finance procedures and so back up that happens annually. Well I guess I'll tell the story but a lot of times it is the book people who makes the initial mistake. That was troubling me having been an education for more than I'm going to talk about today eight many times it is that bookkeeper who will make an initial mistake that can. Go up the chain and cause difficulty are you working with individual bookkeepers in each school or is it just administration at the heart of my question the issues that are related to the findings here I'm I'm not I'm not the findings you and say what your practices are you working with bookkeepers on a day to day basis to make sure that they know how to input the data correctly not on a day to day basis for a month basis act that clears it up for me that's all I need to know thank you Mr you're welcome any other questions. Absent if. Thank you Mr chair I'm just curious also kind of in the process because the the section says property taxes were overstated by hundred forty six thousand due to the recording of duplicate receipts so do you mind sharing with me the process because this is money that's coming from the county so there should be a track of that money that's coming from the county to verify what you all have and does this money come in all at once or at various times of the year just kind of help me understand the big picture to of that process so on this particular one I can remember what happened with this you get a monthly report from the county on the taxes that canyon and so they have like the positive of the full amount and then the amount the county with holes so the person that was taking over the receding when she did this and I guess it probably did not get checked I think this happened before we actually went into state take over she receded the full amount and didn't that that to the part that the county with holds. In a lot for the excess commissions she didn't with all that so that's how it got duplicated. Okay. But you do get. Money every month from the county I guess that was also are set apart to get money from the county every every month there it's not at every quarter they deposit what they have it is supposed to be monthly monthly okay. Senator hill. Thank you Sir what that the dole checks and balances committee all use. Do all checks and balances as it relates to tool checks and balances I review revenue once I revenue Clerk actually a composite at the end of each month that is a practice that has been consistent over the last four five months it was not consistent at the beginning of my term second quarter of last year so that's that's a a relatively new practice. But it's just a matter of going through what actually is deposited into the bank looking at what is been entered into the finance system and then looking for those discrepancies re doing the same thing you're available yes thank you. I might draw the committee's attention to items one and two and again the corrections were made. And I think the questions that centered around from the committee at all as a whole what are you doing to prevent that from occurring again but there's some very specific things you mention the property tax you mentioned the to me it comes out of the first five words the district's internal control system and I think that's probably at the heart of senator Chesterfield question I don't want the words in her mouth that you might have a statement or two about what's now practice and policy. One more time about what the internal control systems you've replaced since this occur rather than catching it at the end the primary internal control measure is just a more regular review that was not not was not taking place consistently I would say over the last well honestly three five years there are some issues in place and so it it is a matter of reviewing those files when a week to week basis and making sure that training issues take place right then as opposed to letting the stretch out over a month over a quarter and becoming convoluted with other transactions in in our system and now net and to do that state or start an additional step would be each month I received the journal entries as right as well as the bank reconciliations as well as the bank statements and I I review those and sign off those before we send those to commission a key for his approval okay. Any other questions about one two before we move into some title one and and lunch program questions. Seeing none I would direct the committee to look and focus on finding three which is basically the child nutrition reporting heirs and then finding for which was a title one program FOR reporting air and buddy have questions concerning those again I believe they've been corrected but. Protocol to keep that from happening again. Maybe I can do the first question do you want to be care to. Assesses that have changed along those two programs yes I have the revenues revenue person as it relates to I guess it's finding three my revenue person my inventory Clerk and I meet monthly to make sure that new items that qualify for inventory control list are being properly entered in the system so that we can track those things one of the issues that we ran into with finding three was that we identified material but we've not updated I fixed assets inventory list in the finance system so this year there's been a greater emphasis on going and actually removing those things that we know are lost with that we know far are not available most of the items that were identified here where identified in previous years so we've known that those things were existed that they were not that we did not know exactly where they were and that they need to be removed from the list that process didn't take place that is something that we are doing this year so that at the close of the issue we will have a fixed assets inventory list that accurately reflects what we actually have in our schools. As it relates will. Other questions committee members on three and four. Seeing none let's move along to the finding five which appears to be focus predominately on bank reconciliations Dr you gave us a policy earlier that you do compare those to do you care to add anything with relevance to the the bullet items we see in front of us the things you've done to make sure those don't occur anymore yes Sir I Senator if we could briefly share the background of how this finding came about and why as a repeat of Mister Harris if you can kindly explain the issue of. The back statements that with with this particular finding we have outstanding checks going back to probably two thousand ten that have not properly been cleared out of the system in my talks with Simmons bank I've asked them consistently for a file that will allow us to do that that was not provided in Q.. Q. two Q. three of last year but you for I was getting a follow still having to manipulate that up through that time point I was having to go in and manually adjust out checks so it's a long and detailed process I do feel like we have turned the corner your recently on that process but that does not negate what was in the system last year will was not cleared out. Hi I suppose just because we always are drawn to numbers big numbers you might explain the seven hundred seventy eight thousand dollar outstanding check and what the scenarios I was told what it was this morning but for the committee's benefit. It's my understanding that the. Issue in question related to a child nutrition check that came in at the very close of the year we went in identified that reconcile the issue but but because we. Cut over fiscal periods it created a fighting here. Questions. You got to work cut out for you also programs for sure I think we're seeing improvement I mean are staff tell us in the audit department that we are seeing a willing participant trying to get this right for that we applaud you but you got a lot of work to do so center for represented flowers. Thank you Mr chair. are would like to echo or maybe even leave the applause. For your work and for the improvements and My question I guess sort of overlaps with what senator Chesterfield fast but I wanted kind of asset a little more specifically. What I'm hearing with all five of these not only relates to internal controls. But also it seems like we're talking about systems I don't know if it's internal or external controls and then just now I heard you say that you had some issues that extended all the way back to I guess ten years two four to twenty ten yes ma'am ten years. So. Given that we're under state control and in fiscal distress I'm wondering if I guess more broadly. Are there is still issues and concerns that you all are working through that may not manifest in what we're seeing today as it relates to internal controls and then external systems controls and internal systems controls. I think that anytime you undergo the kind of organizational change that's taking place with the state takeover you have culture issues and so those are some of the issues that we're looking to address a lot of and and not to make excuses but a lot of our staff had had challenges with the swiftness of the change in leadership so those are issues that were working out that was create trust issues those create loss of productivity not like is it not to make excuses but these are we asked about those under light things that don't show here those are some of the things that we have to there were challenged with on a day to day basis still going through on a seemingly monthly basis and Finding out past practices not even necessarily financial fiscal practices but past practices through the district that have led in large part to the the situation that because the district to be taken over to begin with these are all a part of the things that that we work two to resolve but they're very present. Thank you and represent flowers about that and that. To add to that is also just the process of how we leave a building when we close a bit closes school or another district building just the past practices of the individual just leave and the equipment is there and so having to go through all of these buildings in the district that were close several years ago at that time we realized that that could definitely impact the town Trish nickel equipment and the conditions of the buildings are not safe enough for the personnel members to go in when we went to southeast think the auditor and not one of our personnel members were in the deep water and they can go all the way into the bill and so wearing counting encountering issues like that so just working through those processes to make sure that we're more accountable and that we clear some of these Especiales repeated findings those have been some areas that we encounter to the process. Thank you very much. Representative Smith I've got to Smith so I'm going to go for Brent you go first. Thank you for being here today and You mention the dramatic chef in the way and the organization and and One of the things I'm curious about one an organization makes a paradigm shift or a big course correction. Staff and members of your faculty or team need to be communicated with. Broadly as much as you possibly can so what are you doing. Texas kind of spread the word that these changes are necessary or we will not last. I think the the the primary thing that we've done and then doctor what can can kind of leverage on this as well is really emphasizing the principles that past practices or any kind of practice that is outside of what is in written policy and what is against AT guidelines just won't be tolerated that we cannot that everything that we do must be submitted and must past muster so to speak that hasn't been the case over the last few years and so with with both of us coming in last year that is been a significant part at least from my standpoint is establishing that would principles so that they communicate that with their book keepers and also working with our central office staff to help them understand that this is the new normal that we have to have things that we can send up to the state that will get approved and that will that will the one for me guidelines in in the educational piece is has also been important one continually sharing with our leaders both at the district level in the school of the importance of following policy we have a complete section on fiscal processes and as many opportunities as we have and principal training and the different departmental training always referencing the policy and not assume any our personnel our premier you're with the process is that that that our government within our policies so we do a lot of that and then unfortunately when it comes to disciplinary I situations following policy and sharing those policies that were bought by lady with those personnel members hello follower please like Sears thank you a. Really it's it's a really good that you're doing that I'm wondering are you relating these fiscal policy requirements in work groups or is that small group or is it like broadly to the entire faculty and are you being received well by your people they are related A relayed most regularly and staff meetings in central offices is Dr I mentioned earlier we've moved most of the actual processing out of the school building back to the central office they'll create requisitions on paper but those things because of the debt request process are then processed and in our central office so that we can make sure that that requested done properly that coatings put on their properly that even makes sense that it fits into a plan that review is taking place and central office in previous years it's a place out at the at the building level which allow for a little bit less scrutiny on what was submitted in what was approved and an additional measure that we implemented this past summer is that we provided the fiscal training as well as other for policy training with our administrative staff at the school level they returned to the same documents that we train them all and train their staff at the beginning of school and so the beginning the school year so we'll continue that annual training but as Mister Harris just indicated that we most of the fiscal Maddox financial process is happened at the district level so retraining them and and guiding them through the process is where we currently at right now. Thank you thank you. US senator Chesterfield I see a request for question or comment just an observation at I think one of the biggest problems we have and we changes we've always done it this way right. That is the big one of the biggest problems that I think pine bluff and some of the other districts by having is we've always done it this way and it may not be the right way but it takes a total paradigm shift in culture in order to move toward where you want to be would you agree with that definitely I senator Chesterfield and and that's what we really encountered more often than than anything else is that we've always done it even when we take the time to show them but policy says this law says this the state rules say this is that will they allowed it this you know previously and so really re training and and and staying Okay let me be blunt if bill to be eight to five. Never mind. is to protect the innocent we don't need to answer that are. in a second I'm gonna ask for a motion to file this report is there any last comments you'd like to make. All I'm sorry represent flowers do you have a question. Motion at the proper time okay do either one of you have a comment before we go to motion. I will say this that we are working each and every day to address these and will continue to make sure that we have these internal controls in place one for so we'll continue to work on that current the state have anything the Smith. I would just like to share that we have put into place a new superintendent they can't for finances that we have a raiment and we invite all of our new superintendents to it and doctor over can attest to we are having people come in and and share things and we've had me it's coming in to help them see how to get more Medicaid in the schools we have had an attorney from Arkansas school boards come in and talk to them about different issues like reus the FMLA. Senate PPC in CP PC so we're bringing in different people with a lot of experience to help them and they can ask direct questions it's a small group it's about fifteen of them and they can really get a lot of good information and we're getting ready to start doing that with our business managers also to have a small bit camp for them to teach them on the things that they can take back to their staff. Very good committee I with the chair would entertain a motion to file the report that these findings have been reviewed. I have a motion to so moved I'm sorry did someone that care representing Smith all in favor say aye and same sign opposed. The motion carries unanimous and thank you very much. Let's move on to the next report and let's give them time to get to the end of the tape do we have anybody we don't have anybody from Armitage doing. Hermitage isn't in the room. Okay let's go ahead and read that finding that mystery. A yes hermitage school district Bradley county they had one finding and this finding was referred to the prosecuting attorney. During the twenty nineteen fiscal year the district paid twelve seventy five for twenty eight tickets to a college football game for students coaches and sponsors a fundraiser needed three hundred eight dollars and the remaining nine sixty seven was paid from the football activity fund account. In addition an accommodating purchase of twenty three twenty three hundred forty dollars was made for fifty two football tickets for parents and other school employees. All funds with the exception of ninety dollars were reimbursed for the accommodating purchase. The use of football activity fund account funds and the accommodating purchase conflict with Arkansas constitution which states No money or property belonging to the public school fund or to the state for the benefit. For the benefit of schools are units university shall ever be used for any other purpose other than for the respective purposes to which it belongs. Of when I dug into this and maybe the committee members have some questions but I will put it out there this was not necessarily a loss of money they fully intended to pay for that but they use the come up because schools. Means I guess credit card to pay for it and that was their mistake they were trying to have a fund raiser take kids and parents to raise or back games and what should have been done by a person rather than a school was done by a school and then the money was raised they ended up being I believe ninety dollars short. yes there was ninety dollars at the the school and absorb because they were on you stick it and they have been notified and is made. Correct is that right and not that I'm aware of they had on they have been notified is that over the all the. Yes okay they've notified do you have any questions I guess the question be for staff of anybody has one. Represent Fortner. Did I understand you say this is referred to the prosecuting attorney yes yes Sir just missed using a credit card by accident. It wasn't necessarily by accident in the intended to pay it back. The reason it was referred to the prosecutor is because they used public funds to pay for the tickets for the coaches and student athletes which is against the public purpose doctrine and then also they used it they use a school credit card to obligate themselves to purchase tickets for other individuals as well even though they were reimbursed as well they obligated to school at the at first by charging it to their credit card. So. I guess somebody must've thought they either didn't intend to pay it back or they would referred for prosecute to the prosecuting attorney is that an assumption that I can assume. Well this man referred just because it was using that the the the purpose of the expenditure is not for a school purpose. And then I used funds. Two five other individuals outside of the school tickets as well. Makes sense that makes sense sounds foolish if it says stated. To referred to a prosecuting attorney for a just a books well it it's just our policy to refer or anything that's a that's against that's against Arkansas constitution this was against the public a public purpose doctrine so it's are substandard policy to refer those those findings okay alright thank you I saw Senator Clark St next. Yes was this All the ninety dollars was paid back was is paid back before the audit. I mean this with before was caught. Yes for the I'm sorry for the the. The parents and the other in school employees they were reimbursed to school between. My notes on that. the football game was on September first and they got the tickets in July and they were reimbursed between July twenty fifth and September sixth. Which is with for the audit story okay so that it wasn't something like they were called and then they reimburse right that programs it was always meant to be. To facilitate. To make it easier for everyone correct okay thank you. Senator Chesterfield did you have a request and just I guess I'm puzzled because. If there were criminal intent I could see them being sent there. And the criminal intent for all practical purposes was mitigated by the fact they pay the money back and to me it was a matter of not knowing the rules so that's why I'm wondering why we took to me it is extreme action if by the time audit came around these people involuntarily pay back that money it was not criminal intent it seems to me even though technically you're in violation of something so why did you feel it necessary then to just. To send to the prosecuting attorney as if they were trying to steal money that they don't rebate back. There's two parts to that finding they used regular public school funds to purchase tickets for the student athletes coaches and sponsors as whale. That they paid their money back. Not it. The no. I said thank. Any other questions. Then I would entertain a motion that this has been reviewed. I have a motion do I have a second. I have a second all in favor of submitting this is a reviewed motion please say aye. Same side opposed motion carries all right let's move on I believe we have some people from our rural. School district. And if you would please introduce yourself in the capacity Sir. Petition all superintendent oral school district Cindy Smith fiscal services and support Arkansas department of education. Okay of Mr knew would you please read the findings for all. A yes and I'll just make the note a rule is on fiscal is classified as fiscal distress as well and that's has been as effective as since October twelfth twenty seventeen and it's also under state control which has been effective since November six the two thousand seventeen. curls first finding the district claimed fifty eight hundred in in direct cost in excess of the allowable amount for the title one program. Finding to is a repeat finding. During our examination of payroll records for twelve employees and leave records FOR six employees we noted the following internal control weaknesses. One classified employee was under paid nineteen hundred and eighty nine dollars. There were four instances where the district did not maintain adequate leave records and did not follow the district's written policies and procedures. Two of these instances resulted in one licensed employee and one classified employee being over paid nine hundred seventy three and four hundred twenty dollars respectively in unused late payments. Finding three is a repeat finding as well. The district could not account for eight equipment items purchased in prior years with an original value of seventeen thousand eight hundred and three and a book value of sixteen hundred forty four dollars. The total number of equipment items tested for inspection was fifteen with the original cost of forty three thousand and a book value of fourteen thousand. In a similar finding was reported in the previous audit. And finally finding for the combined fund balance of the teacher sal teacher salary operating and debt service funds was that a deficit amount a June thirtieth twenty nineteen causing the district to exceed its legal revenues by eighty two thousand six hundred and nine in noncompliance with Arkansas code. Thank you for reading that would you care to tell the committee what you explained to me that teacher salaries typically are a line item below operating and that the combination of those three counts is what was found well teacher salary the teacher salary fund is kind of a like a clearly account that's where they pay all their certified salaries and. Periodic transfers are made from the operating fund to the teacher salary fund to fund those expenditures so basically that's a pass just a clear out fund. Okay so with that would you like to make an opening statement and then we get questions. This isn't all lower miss five met the one I would like to say that we are working with that department to remedy some audit findings I was before you in October for last year's audit funding is a new superintendent took over in July and now I'm here again so soon and so I want to say that we are working through process is very much like pine bluff the is to take care of internal controls an external controls to make sure these audit findings don't happen again so we forgive me are you Dr knoll I don't know I'm a nine okay Mrs missiles all right good enough and Mrs Smith would you like to make an opening statement. And just that we are providing them with the assistance in trying to give training to their staff so that they learn what not today whenever we were we have the heirs we try to train them so that they will not make the repairs okay committee questions senator Chesterfield. Thank you Mr chair I guess. It's troubling me as it did in pine bluff you are under state control. And we continue to have repeat findings under state control you only have five years. So impressed just use that same thing I think basically I said what are you doing. We are I'm attending this superintendent big camp every month not miss one since I began we are working with our on the ground payroll Clark HR people and maintenance anybody who does inventory working with these people daily again like time bluff we do everything at the district level so we don't have coding at the building levels at this time because we're training folks to do that one of the things that has been very important for us is to make sure we have that transparency so that our district our school are building levels are teachers classified state everybody knows we are in fiscal distress we are working through the we are trying not to repeat practices and the training is so important so everybody past not not everybody the majority of our staff is new to their position within two years so are assistant bookkeeper and our accounts payable person all of those I've been two years in their jobs so they are still in a training mode and so that is one of the things that we that we are working with I meet with them on a regular basis week like they're in the same office area as I am and so we go through those same things the bank statements the clear checks it processes with inventory and we're just really going for those training and just following up did did we do this have we check the S. to make sure payroll heirs contracts those types of things this was the very first year that we actually our our HR person actually works we have eighty eight to do the contracts this year so that's new to harm. So how many years we've been a superintendent of since July this is your first superintendents job yes ma'am I don't aim on board to the district in January what would I ask. I know doctor doctor was background and I don't know yours I didn't ask him a lot of these questions but. Do you bring to the table that was say the people of our rural this is the person best suited to bring us out of fiscal distress was your background my background I actually was a special education teacher fourteen years I was a principal after that in a district where I was also federal coordinator and curriculum coordinator so you have a wealth of experience I do and I went to the co op after that so when I was the teacher center coordinator at Crowley's ridge coop for eight years prior to come to that so I have that administrative experience in dealing with budgets and grants and funding and so with all of that this being your two is that right actually I came on board to to in January okay is issued to of fiscal distress for or hello this is are you at three E. we year to it We your again year three November okay you got four years we don't get it right yes ma'am alright thank you madam chair thank you Mr. Thank you senator Chesterfield did I see a question Representative fielding okay anybody else. No okay do you have seeing no questions do you have any closing statements or we as promotion for your of to be reviewed. Closing statement. I just like to thank you for the opportunity to get everything right and can put it in motion we feel like we had to have a very responsive audit team the finding on finding number two where we have the overpayment of the employee we actually paid that employee the money that we owed her before Christmas right so she was very a lighted and so we're trying to work through those processes and make sure that we have a plan in place we're working with the department on fiscal distress plan to make sure that everything is in motion so that we're doing things the right way. I think this committee typically like most law we here we were thankful that you work with our audit staff to make corrections and to work with a positive attitude towards towards fixing it I would reiterate senator Chesterfield comments the clock is ticking we got to get it fixed as soon as we can and hopefully what you're putting in place with with the state's help is going to give us policies that we don't see you again unfortunately so A yes Sir how high sure so and with with the inventory items we need to have some buildings that are no longer in use we have inventory items in those and we had a problem with snakes in there in the spring and so those are some of the the things that we're working through we have tried to find those locate those items that are really no longer in use but just have not be and removed from inventory so we have that process is in place actually prior to the audit auditors coming up we did put process is in place and we are working through those inventory item so we're gonna have two times a year where we follow through with that inventory check to make sure everything is on inventory are deleted removed sold whatever we're going to do with it and we will be doing that was as a check out procedure FOR teachers when they leave in may and also as a check in procedure when teachers return that way in case anything it's been misplaced over cleaning and things like that during the summer that those items can be everything can be accounted for okay. The chair would entertain a motion to file the report that these four findings have been reviewed. The very. I have a motion need a second. I have a second all in favor say aye. Same side opposed in the motion carries thank you so much thank you. All right I believe we have someone from Marville. Marvel. Marvel school district of Phillips county. But I say their own. Yeah how do you say it maybe that'll be the Marvel okay. Marvel Marvel okay. I'm sorry. Okay Marvel very good please introduce yourselves in the capacity of which for here I'm Henry Anderson the new superintendent in the modeling school district thank you. My name is mark English the school board president for good. Then was initiation I'm sorry they sent this was my teaching mate he was in English and I was in social studies and FOR junior high school so so we might want to give him a here on the screen. We get the story straight here. All right Mr newt would you please read the findings forced place. yes or find yes Marvel they are also classified in fiscal distress and that was effective as of April eleventh twenty nineteen. The first finding the district's internal control system did not prevent or detect significant errors in the financial accounting records which are utilizing the preparation of the district's financial statements. The district's general ledger did not reflect four hundred eleven thousand of undistributed payroll taxes resulting in an understatement of cash and accounts payable. In the general fund and that was in the general fund excuse me additionally the district understated accounts payable and facility acquisition and construction services expenditures by one hundred and eighty seven thousand in the other aggregate phones due to the failure to a correct construction payment for work performed in the twenty nineteen fiscal year. In the financial statements were subsequently corrected by adjusting injuries during audit fieldwork. Finding to. Total one school improvement grant expenditures for function fifteen ninety one which is an expenditure code exceeded the budget amount about eleven hundred and twenty seven dollars more than the ten percent variance allowed by eighty. Finding three. Of the districts budget which it was formally called the accident did not include title one program Hiero expenditures including fringe benefits for a curriculum specialist totaling thirty four thousand eight eighty five. And and the title one school improvement grant expenditures for reading novels totaling eight thousand to twenty six. Finding for is a repeat finding the district failed to make timely federal tax deposits for the quarters ending March thirty first twenty nineteen June thirtieth twenty nineteen and September thirtieth twenty nineteen the deposits were subsequently remitted in October of twenty nineteen total interest and penalties have yet to be Turman by the our our is. A similar finding was reported in the previous audit. And finally finding five. Salary increases of five percent or more from the previous fiscal year were not presented to the board for approval as required as required by Arkansas code. Okay opening statements of let me make sure I get titles right do I have a doctor Anderson here Mister and not yet not yet and I yeah but in the process Englischer missed during this mystery okay opening statements or comments for again and Henry Anderson superintendent marveling school district came on board July fifteenth twenty nineteen and you know you kind of walk in and you go Hey I'm going to be a superintendent many in the chair for Menifee okay now what's the real reality and what is it that we really have to deal with and so in that we began working with the fiscal support unit we meet with them monthly our bookkeeper comes down almost weekly and so there's some work that we do also in the superintendent who can't there's a lot of things that we've had to go through one cover review sit over night and just make sure we have a full understanding member list of questions the next morning to get the answers and then be Persistent in getting the right answers to do the right things to get the base of the draft and fixed we also have to have the perseverance and the tenacity to say to people what you're doing is wrong you will see send a fifth or you won't be here with us does everybody like that no they don't. So we have a couple coffee X. R. cocoa have a little discussion and then we still face what you are doing is wrong you will see if and if if. Or you won't be with us so there are some people who have already made some conscious decision to do some different things because of the pressure that takes place with being compliant we've also been fortunate in the new superintendent to have. Board members who Fay listen. We love our district we love our city and more so we love our TX and we charge you. With getting it done. So I say that because it's been a fun journey. I believe that one. But it's been fun because it's a learning experience like none other. But we're making progress and we're succeeding in making something happen you will find with the findings that many of them we have the practice of already in place we're holding people's feet to the fire to get it done. If that does not occur then there's some disciplinary actions that we do. We've been fortunate because and and Marvel at the small community so they know the board members and they'll say Hey Hey K.. And they spend the board members say so what did you do. And then there's a big discussion we're fortunate today that we have board members not just up for president but also Mr Williams here with us are federal programs person are correct one person and a bookkeeper because I want them to understand what you do every day puts me in this state. And I'm not coming to gain. I like it. Eightieth what is. so and I'm I'm so we also have our board secretary miss holder who is here with us we have three of our board members here with us who have taken off for to be with us to say Hey we got two was going all. And and with a beautiful if they spent part of the morning kind of going through things and okay so what we do about this what and they were with fiscal and so with my time even with with this thing okay so what we are we doing the right thing here can we do this can those things that are necessary so that you move a district four it's not enough to have a title. You've got to put in the work because kids features are at stake. That's my opening statement Mister English do you have I'm a well just like to elaborate on was stands the said that up we try to do the work the the clear up some of the fine is that we train our staff to. They they may not know everything that they need to know so we make sure we give them opportunity to learn what to do and correct those things before the next they'll come where they may be out of job so we just given the opportunity to to fix this and just understand it I keys are. Does the center point of everything that we do. It's a very encouraging the chair will state I have a father and a brother who bill said in superintendents chairs and your job is what makes that chair work and that's a personal statement that I hope the committee will allow me to say all of you need to be in support of the same direction you're heading let's get to questions I saw senator Chesterfield I believe first yes Sir thank you Mr chair and welcome Mister Anderson soon to be doctor into sent by how he's grown from the little guy that I knew of. As one of those individuals who is travel to Marvell several times to observe their schools because one of the things I I said to. The Education Committee you cannot know what adequacy is until you see what in adequacy. And I facilities and not what they need to be in marble we need to do better as a state for then we change the formula but the one thing I found consistently E. is that the people of Marvel care about their key. I mean that has been consistent throughout each administration there is a care for those children Representative Richey shared with us the other night at a conversation on state of education the African American community what the goals are what the hurdles are what we're doing and so I just salute you all for being here as a group. Because it is not easy coming to this group and I'm not be nice today and thank you just took over your with the state get but I know when you left and that was last summer so because he abandoned us in north little rock we won't talk about that but that's a whole nother matter here is a very capable person and will do a good job and the people of the community have been great every time I've been there and I've been there more than once just want to say that Mr chair and would you agree I do. That's my question I think that next I have Representative Mayberry in the queue. Thank you Mr chair first I hope that you teacher broadcasting class because I absolutely love your voice is that James Earl Jones voice I'm telling yeah I could leave more but. I am just kind of curious because it yeah and the finding number one it says that did that the general ledger did not reflect four hundred and eleven thousand dollars and it resulted in an understatement of cash in accounts payable in the general fund payroll taxes I'm sorry and I'm just curious how that effect does that affect I arrests are we dealing with iris and clearing things up there over payments I mean under payments at. So if they're gonna fix the IRS and so in in the past and in the animal district that I found out from the print and bill camp the superintendent that the superintendent and get the mail be in and taking of office and open every piece of mail. To make sure that every thing if accountable for money coming in money being spent what the bill is every bit of that so when are if letter came and I was like. Wow I opened it and it was the bill for like you to mail and I'm going what the what and so I brought about in the book keeper I called. Yeah I called with active like look I got this what what if the if well under that means somebody had done what they need to do a payroll tax so then I got with the bookkeepers okay so where where is this money somebody had to have been paying payroll taxes right across the street if that bank Corp got have been dolphin over there. They just didn't do nobody just cut a check out of that account to pay for the taxes when you could actually do it electronically guess what we're doing now it's electronically done we owe about seven thousand dollars in that the penalty that the and if you thank you like my voice now wait to iris hears it and I try to get those fees removed because we don't have a thousand dollars to get that are if we love Uncle Sam but I love my kids more and I can do some things with a thousand dollar from a baby. So so was this just one year then that it was like that or has this been going on for awhile. So what happens if you all remember before Mister Anderson came in we had embezzlement it at Marvel so when that business manager left we hired a consulting group to help them to we could find the screen bearing to take the place so they were processing everything and they would give the check to the bookkeeper that was it she's like a secretary bookkeeper and she would deposit it but she failed to make the second step of city sending the check to the IRS she put it means there's no money missing she deposited she just didn't take that next step and get it sent to the artists that we had that many sitting in the bank correct me if I'm wrong when I asked the questions this morning you're caught up with maybe the one being January fifteenth twenty twenty payment may not be done the law all of last year's of been made is that correct all of those okay have been taken care and the January payment had that's good we weren't sure that the January we are current mine filthy all right let's move down the list and please forgive me if I didn't get you in right order but I saw Senator Clark next and then I've got two more after that thank you. You were dressed Mister Anderson of. What I'm going to ask you about. The but let me say that I love to say that I have eighteen is the best school superintendents and state of I think all of your tone I think everyone here love your tone you ever get offered a job at one those eighteen schools I'd love to have you of that being said and let me also say that I appreciate what you said I would love law to superintendents to of heard what you said of the that. Because I love it when I hear superintendents and administrators say. That when we set standards and tell people and continually let people know what they have to do. They'll either do it or they'll go somewhere else you don't even have to farm and then you can follow it up with yes you can't borrow if you document you can actually farm and all the good ones no that the others say all we can't of the of the so. Having said that what you just addressed funding number four was what really bothers me. Of the and you just addressed it of the fact that these of federal tax deposits were may. As a businessman. You know small businesses. That but don't do stuff like this just go away. Schools that don't do stuff like this come back to the legislature say we need more money. Of and well I'm with you I appreciate what you said it pains me. That we would just not pay this and then this and then pay penalties and soul and I hope and again you have to be nice and then you have to be mean and you have to fight for that eight thousand dollars to get it back and then the sure on that will never happen again but we can't let things like this happen I know you already know that but this money for these kids is too precious of and and then it makes us skeptical. It went when when folks to come in here so we need money and we said but. We see some of the things that happen but thank you for what you're doing you already answered the question thank. Next I have Representative Hodges he's passing represented Fortner. Point of personal privilege if I could. Go ahead you have the Mike. How many of you are here with the superintendent. I applaud you all I do. I know it took an effort to get here and support him I hope you go back to your community. And tell them what he had to face and what he will have to face the future. If he comes back again it will the nearest kind I don't care what kind of a voice he has. Okay so I I do applaud you guys and you are the ones that can enable him to make that district before he can't do it myself. Thank you Mr chair good any other questions committee. Seeing none the of closing comments before a request a motion. We have already when we sat in the audience listen to the other districts with the reports and saw the ones that fit report would know findings that are inspiration Argo for next year I'd like to just walking Fay Hey keep going So we working in that direction we're working in concert with fiscal support unit we are holding each other accountable and getting things done for reaching out to other districts that are doing it way out to say how are you doing it we use in the FMS listserv to find out ways to do things a little bit better and a little bit more cost effective so that again we're able to do what's necessary to be that small district on highway forty nine that has that have success. Market. Anything else committee members. Everybody less now the chair requests a motion to file the report that these findings have been reviewed do I have a motion. I have a motion and a second all in favor please say aye. Same sign opposed motion carries thank you. Continue on. All right committee I believe we're ready to flip over to reports with no findings and since we definitely don't want to spend much time with that other than I sometimes think will spend a lot of time on those schools in recognition we need one motion to accept them all is that correct a yes we can take a motion to approve in a man and a mass I need a motion to approve in a mass that these reports have been heard in review absent a Fortner second. Representative Mayberry second all in favor please say aye. And thank you for your hour and eight minutes of of work for shale legislators we are really we are adjourned.