Legislative Joint Auditing-Educational Institutions
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Speaker 2
0:00
Okay, if everyone's ready, we'll call the meeting to order. Chair sets a quorum.
Representative Stan Berry
Unverified
0:31
And item B, adoption of minutes of the May 13th, 2021 meeting. Motion to adopt. Motion to adopt. Second. Second. All those in favor of the motion say aye. Aye. Opposed. Same motion. Motion carried. Okay. we have
a few districts that we're going to go
over we'll try to do as quickly as we can
and I'll turn the mic over to Mr. Fink thank you
Speaker 7
1:12
65 educational reports for the fiscal year 2020 to review of the 65 reports there were seven reports with findings, three of which were referred to a prosecuting attorney, and one report that had repeat findings. We will begin with the reports that referred to a prosecuting attorney.
The first report is Bald Knob School District, which had one finding. The district used general activity funds to purchase $1,200 in gift cards, candy, and keychains for staff appreciation gifts. Use of beverage contract funds for these purposes appears allowable under the contract, but conflicts with Arkansas Constitution, Article 14, as interpreted in the applicable Attorney General opinion, which supersedes the contract. And that concludes the finding for Baudenau School District.
Representative Stan Berry
Unverified
2:07
Any questions? See no questions. entertain a motion to review? Motion. Second. All those in favor of the motion say aye. Aye. Opposed? Motion
Speaker 7
2:27
carried. The next report that was referred to a prosecuting attorney was Heber Springs School District. Cash counts conducted by district personnel revealed that four deposits of concession stand receipts were short a total of $835. Further investigation by the district revealed that
an employee also did not receive or submit to the district approximately $760 in cash collected from students for athlete footwear purchases. The employee was placed on administrative leave and resigned in November of 2020. The district reported these matters to the Heber Springs Police Department and the Arkansas Division of Elementary and Secondary Education. That concludes the findings for Hebrew Springs School District. Are there any questions of the committee?
Representative Stan Berry
Unverified
3:14
Seeing no questions, entertain motion to review and second. All those in favor say aye. Opposed? Motion carried. Mr. Fink. Next
Speaker 6
3:27
report is for Middle Springs School District. This was the final
Speaker 7
3:31
report that was referred to the pa on today's review the district used 709 dollars in operating funds for non-business purposes purchases related to a christmas party and a class reunion in conflict with arkansas constitution as interpreted in the applicable
attorney general's opinion and the district paid a board member son 2200 for performing summer work work. The school board approved this transaction, but a written resolution was not adopted as required by Arkansas Code. And that concludes the findings for Mineral
Speaker 16
4:10
Springs. Mr. Vink, do you know if this was approved at a board meeting or some other
Speaker 19
4:16
fashion for the work, the board member's son's work? Yes, it was
Senator Missy Irvin
Unverified
4:25
Okay. All right. Thank you. Ms. Andrew? Was this work put out for all people to apply?
Do we know that in the minutes? I do
Senator Missy Irvin
Unverified
4:44
for you, though, at the conclusion. Yeah. I'd like to see if this was an opportunity offered to more than just the board member's son. because that if it was sole source or if it was an opportunity of employment that was offered to all of the
young folks in that area I'd like to know that from the school I don't know if there's somebody from the school here okay I'd like to know that Are there
Representative Stan Berry
Unverified
5:27
any other questions? Okay. No other questions. Entertain a motion to review. Motion made and second. All those in favor say aye. Aye. Opposed? Motion carried.
Speaker 7
5:38
Mr. Bain. The next report for review had a repeat finding. this was Southeast Arkansas Preparatory High School. First finding was during our examination of non-payroll and payroll expenditures, we noted numerous issues related to inadequate supporting documentation, proper approval and authorization of expenditures, use of pre-numbered checks, check images not available for all purchases, misclassification of expenditures in AppScan. Purchase was not properly bid and payroll documentation was not available for
inspection for all purchases. Additionally, a budget was not provided for audit review and the June 30 bank reconciliation was not performed. Finding two, the combined fund balance of the teacher's salary and operating funds was at a deficit amount at June 30, causing the charter school to exceed its legal revenues by $3,600 in noncompliance with Arkansas code. Finding three capital asset records were not established. And finding four during our review
of receipts, we noted the following issues. Issuance of receipts to correct coding errors instead of recording a journal entry. Nine receipts entered into AppScan using an invalid receipt number. Receipt books were not provided for all months. Receipts issued in January of 2020 were not complete. Validated deposit slips were not provided for all receipts issued. And supporting documentation was not provided for one receipt. I would like to make one note
for the committee. On March 12, 2020, the Arkansas State Board of Education approved the transfer of the Charter Schools Charter to Friendship Education Foundation or Friendship Aspire Academy, Pine Bluff, effective July 1, 2020.
Representative Stan Berry
Unverified
7:37
Okay, we have someone with us from
Speaker 29
7:41
the Ed Department to discuss. if y'all would
Representative Stan Berry
Unverified
7:55
when you get to the end of the table state your name and who you're with please you may continue thank you Mr. Chair
Speaker 34
8:08
Greg Rogers, Department of Education Tracy Webb, Department of Education Ms. Cheshville
Speaker 37
8:20
Thank you so much Mr. Chair and so good to see you again I think what
Senator Linda Chesterfield
Unverified
8:26
what is troubling to me is the process by which we approve these schools running a school district is a very very difficult proposition and I'm wondering what you are put in place to make sure that the individuals who would choose to run these places have adequate knowledge of business management and all of the other things that go with making sure that people are paid on time, that we have adequate resources to pay our staff.
What are you doing specifically to address some of these things that continue to come up with our charter schools that are underprepared to become
Speaker 41
9:06
charters? So I think when they were originally approved as a charter, they did have a different superintendent in place. That superintendent left right at the beginning of the last fiscal year, and so they hired another one. Their board hired another superintendent who did not have superintendent experience. He had been a principal, and so that part is out of our hands pretty much until there are issues, and so once there became issues, we started to intervene, and that's when Friendship offered to take their charter.
Senator Linda Chesterfield
Unverified
9:34
But principals have to have knowledge of how to run a school, and that includes the bookkeeping aspect of
Speaker 41
9:41
it as well. Not necessarily. There's a superintendent that is really responsible for that coding and making sure that things are taken out of the right funds, that inventory is kept up with, and he just simply did not have the experience to do that. And once that was realized, that's when we intervened and had friendship take over, friendship offer to transfer
Speaker 44
9:59
that charter. Senator Fein, so when the first superintendent, when the charter was first approved, that first superintendent went through all the different
things they had to. And this charter was only approved by the charter panel for a two-year charter as well. So it is reviewed often when it's with a new charter. Um, in the interim when the new, when that superintendent left and the new superintendent stepped in, the charter panel called them back in because they had some audit issues the first time. And the, uh, the charter panel notated these issues with them and had to make sure that they were going through the tier one training, which is required for all bookkeepers and superintendents, that both the superintendent and the bookkeeper were going through those different training things. We also had APSRC
partner with them, too, to offer additional intensive support to help try to get the finance things corrected. As time went on, that wasn't getting better, and they were actually called back to the charter panel, and the charter panel had made a recommendation to withdraw all that charter application, which at that time is why Friendship stepped up, because there were 200 kids at this school that wanted to stay at this school, and so the department worked with Friendship to try to make a transition over so those kids could remain there, and this charter
Senator Linda Chesterfield
Unverified
11:13
would no longer exist. All right, well, just a follow-up question, and I'll be through, Mr. Chair. It's troubling to me that we're saying that we do not hold principals in buildings responsible for the fiduciary areas that fall into schools because the school the district is only as good as the reporting that comes from the individual schools and so one of the things that we have found as we deal with this is bookkeepers are ill-trained at the local school level so by the time the monies get to the district level they're all messed up so what are we doing then to enhance
the training at the local school so that when the local school bookkeeper transfers that information to the authority at
the district level that that information is correct so in law right now
Speaker 44
12:02
each superintendent bookkeepers required to go through the tier one training underneath that is the tier two training and that is where we work with the superintendent the superintendent of the districts to offer that tier two training to their to their principals to their assistant superintendents to everyone else that might not required under tier one still gets that training under tier two.
We've also included into our summit that we have with all the school districts coming in that we offer more training incentives for the principals for assistant superintendents to come in. And even though you might not have to deal with it at a district level, we understand that at that school building level, that principal does have a lot. And so we are trying to incentivize them to come, get in the tier two, get in the trainings that we have to offer so you can understand how those funds are coming to your school and better yet how to utilize those. And all the employees have been paid? Yes. Yes, ma'am. All right. Thank you. Thank you, Mr. Chair.
Senator Joyce Elliott
Unverified
12:57
Ms. Shaggy. Um, uh, did I understand you to say that, uh, part of the remedy here that you were trying to help them by requiring
them to go through some training with APSRC? Was that part of what they
Speaker 44
13:13
had to do? It wasn't required, but when we were, when the charter panel saw the issues that they were having, it was obvious that the district didn't have the knowledge to do it on their own. And so APSRC stepped up and said we would try to work with them to get their financial stuff back together and get it how it needed to be.
So it was a recommendation that was requested by the charter panel, and APSRC was willing
Senator Joyce Elliott
Unverified
13:38
to try to work with them. But does APSRC have a contract with the Board of Education? No way. Or they just offer and they get it? They contract with different districts. Okay. And from the time, it's obvious that a charter school is not performing and doing what it needs to do. And the time that it becomes part of another charter school, what happens between there for that to happen?
Because I've seen a pattern of a charter school gets in trouble, and next thing you know, they've just become a part of something else. And I don't know what happens in between, what the steps are in between that. So Tracy could probably go
Speaker 44
14:20
into better detail about that because that's in the technical stuff, and she was over the charter unit for a little while, so I'll let her go with that one.
Speaker 35
14:28
So with that particular charter, it was the first time that the transfer law had been utilized to transfer that charter
Speaker 41
14:33
to Friendship. Friendship already had two other charters that had been in operation for at least a year without any issues or concerns at that point in time.
And so when they expressed interest in wanting to do that, the charter panel agreed to
Senator Joyce Elliott
Unverified
14:46
allow that transfer. I mean, does something happen? Did Friendship do something to say, here's why we
Speaker 44
14:52
can do this? Yes. They come before the charter panel, and they take on any of the outstanding obligations that that charter had. They take on the students that they had. They have to. They bring in so they can open up to allow additional students, but those students get first choice to remain in that charter. The fiduciary responsibility goes to friendship immediately upon that,
but part of the negotiation they did do with the charter panel was to go ahead and start getting in there early because of the responsibilities of any bills and all that was going to be friendship's responsibility. So they actually went in two, three months early and started trying to clean the books up. So starting July 1st, they were on solid footing to start going forward with
Senator Joyce Elliott
Unverified
15:32
it. Okay. And is that this, I assume, is kind of similar to what happens with the regular public school than when they become a part of
Speaker 60
15:39
another district. It's kind of like that, but not exactly. Exactly.
Speaker 44
15:44
If there's going to be a consolidation of two public schools, they do that as well. That gets a little more tricky because then you have school boards also that you have to work in, but there is an agreement that works about who's going to take on the fiduciary responsibility, who's going to do that, how is the new board going. So
Senator Joyce Elliott
Unverified
16:03
it's a little more complicated with public schools, but it was pretty much the same. Yeah, and I'll just say, my concern is I've seen time and again when a charter school gets in trouble, then it just becomes a part of some other standing charter, and it's as if we are growing the charter industry without necessarily, I think, holding people accountable for, you get in trouble because of funding, and next thing you know, you're just part of something else, and we grow that industry, and it just seems a little,
It seems like it just needs to be more
Speaker 44
16:35
thoughtfully done. If there is another CMO that's willing to step up, yes, ma'am. Because there are kids at that school, and a lot of times those parents show interest in wanting to keep those kids there. But like Rockbridge, the one that the charter recommended closed, nobody wanted to step up until that one just dissolved. And there was another Covenant Keepers. That one was recommended for closure, too, but that did have another CMO step up and want to take that.
So it really just depends on the CMO, whether they're willing to take on that additional responsibility. Okay,
Representative Stan Berry
Unverified
17:11
Are there any other questions? Seeing none, entertain a motion to file. Motion to file. Motion made. Second. Second. Second. All those in favor of the motion say aye. Aye. Opposed? Motion carried. Thank you.
Speaker 7
17:35
Mr. Fink. Our next school district to review had one finding. It was not a repeat finding, and it was not referred to the prosecutor. That was Arkadelphia School District. The district had no formally documented and approved disaster recovery or business continuity plan, which could cause the districts to be without computer processing for an extended period in the event of a disaster or major interruption.
Speaker 9
18:05
And that was the only finding for Archadelphia.
Representative Stan Berry
Unverified
18:13
Any questions? Seeing none, entertain a motion to
file the report. Motion and second. All those in favor of the motion say aye. Opposed? Motion carried.
Speaker 7
18:30
Mr. Fink. Next report is Arkansas Arts Academy, which had two findings. The first was no evidence of review was noted on bank reconciliations, invoices,
monthly payroll registers, and journal entries. And the second finding was the school had 46 checks listed on their outstanding checks listing. They were over a year old, and it was recommended that they clean that
Representative Stan Berry
Unverified
18:54
up. Any questions? Seeing none, entertain a motion
to file the report. Motion made. Dan second. All those in favor of the motion say aye. Aye. Opposed? Motion carried. Mr.
Speaker 6
19:09
Fink. Our final report with the finding was Pocahontas School District.
Speaker 7
19:13
During our examination of payroll records for 12 employees, we noted one certified employee was overpaid $1,300 due to a clerical error. Any questions? Ms. Chesterfield. Did the employee pay the
Senator Linda Chesterfield
Unverified
19:30
money back and are we good with them? The district
Speaker 7
19:35
attempted to recoup those funds, but to this point they have been unable to do so. I see. So they
Speaker 77
19:41
just chopped it off to profit and loss, is that what we're saying?
Speaker 78
19:49
I would rather them answer that question. Answer the question. Are they here? They
Speaker 6
19:58
are not. We did follow up with them several times, and we
Speaker 7
20:01
do know that they attempted multiple times to recoup that funding. But that employee is no longer there, I
Speaker 80
20:07
assume. That is correct. All right. Thank you.
Senator Joyce Elliott
Unverified
20:13
What does it mean that we are waiting for a response from the Department of Elementary and Secondary Education to do what?
Speaker 7
20:20
i'm not positive on what they expected uh desi to do on that
Speaker 66
20:33
here they lost one half of their company tracy webb department of education i'm not familiar with
Speaker 41
20:42
this um scenario so i don't know And I am new in my role in fiscal services, so I'm not familiar with this issue.
I can certainly research and see, but I don't know of anything that we would do to make
Senator Joyce Elliott
Unverified
20:59
that employee pay the money back. Yeah, that would be good to know in case we see something like this again. This is the first time I ever remember seeing you waiting for somebody else to tell you what to do. You know, like try to
Speaker 32
21:13
get the money back. I'll check into it. Okay,
Senator Linda Chesterfield
Unverified
21:15
that would be fine. Thank you. Thank you. Are there any other questions? I do, Mr. Chair. And I apologize if I may. I know we've already reviewed it, but it just struck me that at the time of our audit in the Arkansas Arts Academy of Benton County, that the 46 chicks that have been outstanding for greater than one year,
do we have any idea of what happened to those
checks and what the result was of our bringing it to their
Speaker 6
21:47
attention? So this was a private firm that
Speaker 7
21:50
did this audit. However, in looking at their recommendation, it looks like they suggested to the district that they go back over those 31 checks, or, excuse me, 46 checks totaling $31,000 to see if those were truly needed to be reissued
Speaker 5
22:08
or if those should be voided and removed from the general ledger. Okay. All right. Thank you. Mr.
Representative Gayla H. McKenzie
Unverified
22:18
Kinsey. Thank you. Back to Pocahontas. On the response there, I'm wondering, it says they're waiting for a response. Is it with regard to the sentence above where it says that the school district is asking for guidance on the bonuses issued to certified personnel that are no longer employed? And is that what the issue was with this employee?
Speaker 6
22:38
So I can answer that. So in this instance, what happened is the district, the employee
Speaker 7
22:47
resigned in January of 2020. The district included a bonus in the final payout to that individual, but that bonus had not been approved yet by the board. The board didn't approve the bonus until April. And so that was part of the issue.
Speaker 9
23:07
And the other part was they miscomputed when they
Representative Stan Berry
Unverified
23:11
try to prorate out the salary. Any other questions? Okay. Entertain a motion to file this report. Motion to file. Motion made and second. All those in favor say aye. Aye. Opposed? Motion carried. We have, correct me if I'm wrong.
58 with no findings, school districts with no findings, and you have a list of them in the very back. So I'll give you a second to look them over if you'd like. Have any questions? I'm sorry, no questions? Okay, motion's been made to file a report.
And second. Yeah. All those in favor of the motion say aye.
Aye. Opposed? Motion carried. And I think that concludes our business. With no objection, this meeting is over. All right. Thank you for coming.
Agenda
AGENDA
COMMITTEE ON EDUCATIONAL INSTITUTIONS OF THE LEGISLATIVE JOINT AUDITING COMMITTEE
THURSDAY, JUNE 3, 2021 1:30 P.M. ROOM 138 – STATE CAPITOL BUILDING LITTLE ROCK, AR
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the May 13, 2021 meeting.
C. Review of Reports. Refer to the Synopsis
D. New Business.
E. Adjournment.
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - EDUCATIONAL INSTITUTIONS, Jun 3, 2021 | Agenda | 1 | Official source ↗ |
Speakers
Speaker 2
Representative Stan Berry
Unverified
Speaker 6
Speaker 7
Speaker 16
Speaker 19
Senator Missy Irvin
Unverified
Speaker 29
Speaker 34
Speaker 37
Senator Linda Chesterfield
Unverified
Speaker 41
Speaker 44
Senator Joyce Elliott
Unverified
Speaker 35
Speaker 60
Speaker 67
Speaker 9
Speaker 77
Speaker 78
Speaker 80
Speaker 66
Speaker 32
Speaker 5
Representative Gayla H. McKenzie
Unverified