Legislative Joint Auditing-Educational Institutions

In the. Adam be adopt adoption amendments of the January sixth two thousand twenty two meeting. Motion the second all those in favor say aye. Apposed motion carried. Okay L. number so the reviews of all reports. And Mr Frank will go over those with us and. Per se thank you Mr chair and good afternoon today we have thirty one educational reports to review thirty of these reports for for the family twenty one and one report was for the fiscal year twenty twenty of the thirty one reports there were four reports with findings and we will begin with S. down school district which had one finding. On June fifteenth twenty twenty one the district's court approved a non recurring bonus of ten thousand dollars to bring tenet which constitute an unequal distribution the district did not obtain a vote of the majority of license personnel agree justice distribution as required by code and that concludes the findings for Ashdown school district. Are there any questions from the committee mission thank. Thank you you're recognized thank you Sir can you going to how that is supposed to work regardless and pull also they supposed to get. All that there's approval or house is supposed to work one of the what should they have done that they didn't do the math per Arkansas Code and non recurring salary payment has to be divided equally among license personnel unless the majority of the license personnel agree to a different distribution. Yeah. Thank. I think we ought to make it clear as an audit committee because school boards really feel that they can do this we fought with this for many years and we were trying to make sure didn't happen was that the big guys got all the money in Little got got nothing and so I would appreciate it if I would send that I like that for school boards that you cannot justify this within this gonna get a raise and nobody else gets one and so I would think that Mr thank you so much. Okay. So what happens in this instance today the money they return. Senate did return that money in this instance but that is something I could find out for you. Is that something that the committee would like to know or just okay so with that all the committee. Sites that. Yes. All right. Next report. The next report with one finding was buffalo island central school district on July thirty twenty twenty the board approved a two percent bonus to certain license personnel which is considered an unequal distribution of a non recurring salary paying without obtaining approval from and a majority of the license personnel as required by code and that concludes findings for buffalo island central. Mr I would ask that the same it can be provided to us as to whether or not they returned the money which I doubt and if not what we can do about it going forward thank you. Misstate. But who certain personnel is. Yes so. What they did is they paid two percent bonuses to full time certified and non certified staff who did not hold a bachelor's degree with fifteen years of experience or a master's degree. So thank granular in the. But even okay but they still can't do it and we're going to get the same response persons assisted built on the same request right we said okay yes I'll get for you. Thank you for holding a further questions. Okay moving on to the next report. Next support was lakeside school district which had one finding. Title one expenditures for title one summer school and vehicle servicing and maintenance exceeded the budget announcmenet about fourteen thousand and twenty nine thousand respectively which is more than the ten percent variance that is allowed and that concludes the findings for lakeside school district. Questions from the committee. Seeing none all as the we Review this report. Motion second all those in favor say aye. Posed motion carried. The next report refining was Melbourne school district meals provided to the preschool and head start programs by the district's trial neutron program we're not reimbursed at rates agreed upon in the district's contract and the number of meals reimburse did not agree with supporting documentation is determined that the child nutrition program was not recouping the cost of providing these mills and that concludes the findings from open school district. The questions. Saying none entertain a motion to review this report. Motion made second all those in favor say aye. Oppose motion carried. Go ahead restraint the remaining twenty seven reports listed on page three consist of audits with no findings staff recommends that these reports be filed in mass. Take a second look those over. I have a question raise your hand and we'll see if we can get a dance. The proper term of entertain a motion to. Review your motion made and second all those in favor say aye. The post appeared. This may be one of the fastest meetings we've ever have. We have one of them correct one item left. US concerning Arkansas state university Henderson state university actually. Which is one. Of. Does do we all have bill this yes there is a copy there is copy available for you. Your body coffee and we will. Get Mr Frank to explain. What we need to do. Then look at as a committee. And if you want to go ahead. So Arkansas Code twenty one to seven oh eight the legislative auditor with the approval of the Legislative Joint Idoling Committee shall give notice and proof of loss to the governmental body under the civility bomb program on behalf of a participating governmental entity when the audit of the records of the participating governmental entity reflects on authorized disbursements or unaccounted for funds or property for which the public official officer or employee may be liable our office received an internal audit report dated January twenty twenty two from the Arkansas university system related that fraudulent and or dishonest Act by an employee at Henderson state university that resulted and destroyed property per the internal audit report H. S. you incurred approximately a hundred and forty nine thousand dollars in remediation expenses due to illicit activity by an employee and an estimated cost as provided by an architect to restore the largest chemistry laboratory alone will be severed and thirty three thousand dollars. The employee responsible signed an ago she had a plea agreement dated November eighth twenty twenty one filed with the Clark County circuit court. In accordance with Arkansas Code and with the approval of the Legislative Joint out of the committee we will refer or internal audit report to the governmental bonding board for their consideration. In order to do that correct me if I'm wrong. This board has to approve the motion to send it to the bonding board. We have of representation. If they would like to come to the end of the table. Identify yourself. For the record and then proceed with your testimony is. Thank you Mr chairman Chuck Welch president Arkansas state university system. Thank you Mr chairman I'm Brad Phelps some general counsel State University systems. Welcome and thank you for coming and the. In order to maybe Keep from asking so many questions do you have some comments to. Sure so representative very we waited until the legal proceedings were over with to file this particular request because we weren't sure exactly what sort of restitution would be set up what that would look like and so we wanted to wait we have not begun any renovations on the laboratory with COVID and with some of the enrollment decline isn't gonna need to do that yet and so this is just the next step in the process of trying to recoup some of those funds as is in the one of the individuals pled guilty one with the trial was found innocent by a jury so. That's putting my statement. Of miss Chesterfield U. quote thank you thank you thank you Mr. Dr Welch is this something we have dealt with before this is come before us before. This has not come before you know it is the only thing that is. We we've obviously talked about we've obviously talked about the the math lab discussion many times but this is the mental Lansing right just talk about what happened to me actually no this is this is amended it is the result of a parent thank you alleged activities but we had never brought this forward because we wanted to wait until the court legal proceedings were concluded before so those of us who knew about that forty eight Medlab this is what we do and this is not a new incident no no no no. And I should have put out to NAS employees or are imported Henderson any longer either well you said that before when we talk about this brightly be yes this is the not just haven't had any more problems. Thank you Mister just want to make sure I had my stuff right thank you. Thank you Sir the question I have is on the restitution looks like it's two hundred and five dollars per month in a little quick math idea it is looks like it'll be forty six years before that gets paid off how did that two hundred dollars and that forty six year. Number come about the. A representative that was the part of the negotiated plea agreement between the the prosecuting attorney's office and Mr Roland I noted the report there is a reference to about thirty five thousand dollars that has already been paid in restitution and the two hundred and five is standard amount will be paid each month it is it is standard and poor's some prosecutions to have restitution orders in place some and I while I can't speak to what's normal you know per month this obviously was a large amounts of we're collecting that amount so to my knowledge and I have a non related questions form at the proper time so I'll go back in the queue. Mr mackenzie. This morning an informational question probably for the chair was I tried to find this information online last night I just miss it. The report. No we provided that specifically to the member the this morning okay and is that just just from is that standard certain reports we don't see online this reasoning behind it just like an a because if I'd known that this is interesting I would like to read it anyway but I wasn't aware the meth labs if you wish to before my time. The. Yes this is different from what we would normally normally do what we would normally do is take the internal audit report when we do their financial statement audit on a basis and we would have included this in our findings that would come before this committee and that would have given us the proper Avenue to refer to the bonding board in this instance we received the report just last month but we felt like was important enough to bring it to this committee's attention now opposed to waiting ten months down the line to to but this before you and then referred over to the bonding board thank you. Any other questions. Sell it. Dr Welch all written in the county of this so we can provide you approval that. If you have been a little while but from your perspective just a law whatever once we go through this process is this is the end of the line for Henderson what a issue needs to do and services to the brick the prosecutors stuff of the prosecutor does and then you're referring this to the finding board is is this the end of the line is or something might we have other. Cool seven as as to as of this incident which shall thanks for all referred to as the methamphetamine yes yes this will be the last time we will be in front of this body it will be referred as as Matt said earlier to the government accounting. which will hopefully take place I feel approve it yes then there's a separate proceeding that'll take place there and after that it's finished I think that's a good reason for us to approve it. Thank you so much appreciate that. The further questions which makes. The on this this was insured so you can rebuild these labs if and when the time comes is that correct okay yes not unrelated question is also something of and I'll guess a week or so ago that they were having a financial shortfall down there and they were gonna be were having to require staff to take a furlough one day a week to make up that shortfall can you kind of bring up to speed on what's going on with that sure sure so this is something that we have known was inevitable at some point where the tough decisions in the cause that had to be made one of the reasons that it we've had to delay in making those was coming the pandemic in the middle of this obviously put it up and things and secondly if we're gonna be very honest we weren't sure we could trust any numbers there were inflated revenues and under reported expenditures there were expenditures that weren't even on the book there were positions that weren't on the book we weren't sure we could trust some of the data analysis and we have a fictive Lee turned over the entire when I say entire there maybe one or two exceptions but functionally turned over the entire staff in the business office admissions financial aid in other areas of the campus I will tell you this there was an article in today's paper that made the the comment that there was a twelve million dollar shortfall of this year that's not accurate the the twelve million it it's we have to look at the chart that includes one time COVID money that is there that we are using now that wasn't there it would look like a bigger gap it also includes three point six million dollars of accounts payable so they borrowed the six million from the state they didn't pay off all their accounts payable in fast year we carried over six million and so now I'm not saying those accounts they were three years old that's not the case but we just never have been able to catch up with all of it and so we're trying to get those paid off and we're trying to make the appropriate adjustments that we can make. To account for no future covert funding in future years and quite frankly to right size institution we've done some analysis on number of positions on productivity on number of programs and just to be very it's out of whack and so those training made now the most immediate changes they're having to be made this fiscal year order to account for enrollment drops into account for accounts payable that we want to get paid off I mean once all and be done we are hopeful that once we get past July that we will be looking at that scenario again furloughs we went that route instead of pay cuts B. calls the you don't have to restore that later you just in the furloughs and also there are assistance programs for the employees that they can take advantage of in a furlough process that they could not take advantage of with a pay cut process that we are working very closely with the W. S. and with our HR departments to work with those individuals but it's all right sizing it's all about old but we get it we feel good now about the numbers that we have we feel good about the budget situation forget about the data analysis that modem through our office and so it's just that next step in the multi year evolution the other thing was as you know we hire permanent chancellor and we wanted to make sure before we took too many massive steps that that permit chancellor was away in and make recommendations and he is the much more the way it is a heavily engaged and involved in this he came on in November is you know and so that that's that's what this is okay so so you're confident that before long Henderson will be back to being a viable absolutely the whole thing is to get to a long term sustainable model now COVID heard us and helped us I mean it hurt us in terms of you know some of the enrollment slowing some things that will help to send an in fusion of cash that help kind of bridge that a little bit but the goal is to not have you know old accounts payable to not have the kinds of situations we put into it to be right so that we're in a situation where employee. The production per S. A. C. H. is on at least a state average which is not currently to make sure that we have you know appropriate staffing numbers when compared to our peer institutions and to make sure that those revenue and expenditure lines are there I just have to say it and and I think I can say this there honestly probably wasn't a single aspect addition hasn't had to be re done if you will or home or worked on and that's that's difficult but absolutely feel good about where we are Page what's having to be done I'm sure none of us like that and and it's painful but I but I will say this for the for staff with very few exceptions they have been while they don't like while that scary they understand and I've had multiple say to me let's get this out across from around our neck and move forward let's be who we're going to be and let's put this in our rear view mirror House senator Sam with regard to this methamphetamine thing so it'll be few months of pain but the plan is for many years future of of not experience that pain again excellent thank thank you. Any other questions. Well I hope that the issue system doesn't. Find any more surprises shall have done a we all done a good way to to represent and and and and to your point that was another reason for waiting to make sure that something that was going to pop up because we were unsure but at this point we feel fairly comfortable Michael wood down here that thing that we're not aware of this point good that I'll write number would do as a. The motion. The motion is that we send this information to the bonding company and we have a motion and second. All those in favor of the motion say aye. Oppose motion carried. any further business film for does anybody have any comments the dog might if not this meeting is adjourned thank you for coming.