Legislative Joint Auditing-Educational Institutions
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thank you for joining us we're gonna start today with asking
Speaker 2
0:17
Representative furman if you would lead us in prayer today. let's stand Well thank you all for being here today we have a
pretty light agenda so we'll move
pretty quickly but as always if you've got any questions or comments please make those notices aware let's see madam cochair any comments today? yet OK all right we'll kick off so first thing we have on the agenda is moving to B is adoption of of the minutes of the September 1le1th,2025 meeting. I see a motion and I see a 2nd 2nd all in favor of the motion signaled by saying and I pose like sign it is approved
Speaker 11
1:10
all right moving to C Mr Fink thank you Mr
Speaker 12
1:17
Chair and good afternoon today there are7 educational audit reports included on the committee's agenda.6 reports contain audit findings and there was one with no finding none of the reports contained repeat findings we will begin with mammoth Spring School District which was previously deferred they had one finding on May2,2024, the district promoted a board member's son-in-law to high school principal for the
2025 fiscal year with an increase in compensation of approximately $11,000 although meeting minutes indicate the board approved this promotion immediately after the board member resigned, approval was not obtained from the commissioner of elementary and secondary education as required by Arkansas code. Additionally, the minutes of the board meeting held on May2nd indicated that the board member was present and participated in the executive session discussion immediately prior to his resignation in noncompliance with Arkansas code.
it should be noted that the board member resigned immediately following the board's return from executive session and immediately prior to the approval of his son-in-law's promotion. However, he was reappointed to his board position before the end of the same meeting and that concludes the finding for Mammoth Spring School District. thank you Mr Fink I believe
we've got some representatives from Mammoth Springs we're gonna invite you to the table at this time.
Welcome and if you will please identify yourself for the record I'm Mark
Speaker 15
2:47
Taylor superintendent at Mammo Spring. Den smoked a school board
president I'm sorry Devin what modsmoot thank you all right thank you for being here we'll we'll just allow any opening comments from from your team here to to this this finding if you have any
Speaker 21
3:12
Well I hope that safeguards are in place. I was not the superintendent at that time and I was the interim appointed in January of 25 so I received the audit finding and came up with the response to the audit finding Anything Mister Snoot I really don't have any comments well thank you for being here today
so I'm looking at the timeline so this was May of
24 and Mr. Taylor you started January25 is that correct? that's correct and Mr Smoot you were board president when how long have you been board president? just this year this year ok but you were on the board in in May of 24 OK. can can you just give us some maybe some color commentary about what happened and it sounded like frankly it sounds like some
maneuvering that went on to get this person promoted and resigning from someone resigning from board was that yourself that resigned from the board and and added back
Speaker 9
4:25
yes sir that is correct OK well will you just kind of talk through what happened
Speaker 27
4:32
in that meeting and what the thought process was was. Well I had so I was a school board president then but I was a board member and my soninlaw applied for the job you know excuse myself had no part of the interviews anything like that
and during that time I contacted Mr. Cody Keys and said Cody's what what do I need to do here to make to do the right thing what's my options and me and Cody visited I believe he talked to Lucas also one of the other lawyers and he said one you could resign and or
Speaker 17
5:06
the other option is to do what was stated in the minutes ok and and who is Mr Keys
OK wonderful yeah you you're welcome to sit at the table as well thank you ok so you said the
option was resign and what was the other option to do what was stated what was read in the minutes well in the in the minutes it said that you did resign so what was the other option? well I could resign and and not be
Speaker 27
5:38
reappointed or I could resign and walk away from the school board or I could resign and the board
Speaker 23
5:43
could reappoint me. OK. could I clarify the other one would be
Speaker 34
5:51
he simply stays on the board but removes himself from the discussion if the board so chooses to hire his son-in-law then they would have to get approval from the Arkansas Department of Education. OK so in this instance he resigned I mean technically everything here was legal I could see the optics of it since he was appointed back at that same meeting might have been better optically if they waited to the next meeting but that was what they did here they chose for him to resign so that his son-in-law could be appointed if that be the choice
of the remaining board members. OK I've got some more but members any
Senator Dan Sullivan
Unverified
6:35
questions for for the witnesses here all right Senator Suulllivan you're recognized thank you
chair guysy this just doesn't look good your thoughts on the optics of this people resigning and hiring and coming back in nobody's got a problem with that I think it looks odd I felt that
Speaker 15
6:56
the optics of it were not good and and I feel that the new60 day waiting period would help the optics of that certainly and also just the fact that you have to understand I have4 out of5 board members that have relatives that work for the school so the optics while appearing bad they they have the potential for being bad all the time so we're working to work through that and make sure that this
doesn't happen again and yes, I agree that those optics are bad had we had a time frame between the resignation and the reappointment that would have had a better look to it or if the hiring of the principal was delayed a month after the resignation. Something would have made that appear better in your in your comment
Speaker 45
7:40
you said we want to do something so it doesn't happen again if that's
Senator Dan Sullivan
Unverified
7:45
true, why would you let it happen in the first place wasn't there in the first place
so that's that's why it happen again in the first place if we're all in agreement it looks bad and we're leaving it in place we're leaving something in place that looks bad and people agree was bad but we let it happen anyway that it just doesn't look good the
Speaker 34
8:11
attorney did you have a comment ? no couldn't anymore because the new law requires that they wait a period of60 days before they can appoint means
Senator Dan Sullivan
Unverified
8:19
it's your board it's your community, your community is happy and you guys get along with it and that's the
way you want to operate you know I'm I'm not going to step in and try to blow anything up it just you know as a legislature we see these kinds of things happen and it gives us pause to think this happens and everybody goes ok we're all good but it's your community. I understand that and if
Speaker 15
8:42
if the gentleman in question the boy the person that was hired to be the principal was doing a poor job that would be one thing. he has worked for the school for7 years and done an excellent job. He was our girls basketball coach
and a teacher English teacher done an excellent job at that and was qualified to be a high school principal and hadd had an opportunity to go for
Senator Dan Sullivan
Unverified
9:08
the position and listen I'm I got no more questions. Your community, your community is happy.body signs off on it it just looks odd sitting up here
in LittleRock thank you thank you Mr Chair. members any
other questions right co-chair Duke thank you senator deeses.
Representative Hope Duke
Unverified
9:28
appreciate it. I appreciate you all coming here I've got several questions. I'm gonna start with how long Mr Smmoots have you served
Representative Hope Duke
Unverified
9:39
years 17 years so you you've had training every year for those 17 years whenever your son-in-law applied the first time I assume you're on the board.
Speaker 17
9:49
No ma you were not on the board when you did a twelveyear stint from
Speaker 27
9:53
2000 to2012 and then I took eight years off and ran ran again
Representative Hope Duke
Unverified
9:59
for school board OK so I too come from a school board experience as several members of this committee do and also come from a small town so I understand having you all having people on the school board who have relatives who work in the school district I was faced with that potentially if my daughter had applied decided to apply at our school district what was I gonna do I've never seen anything like this happen. I've sat there and watched and have had school districts reach out to me because they were waiting on
desse that bothers me first of all that you didn't get the waiver from Desse and you had to know you needed to get the waiver from DesE and I realize that sometimes they take their time and that's sometimes where legislators come into play to make the phone call saying not will you approve it but can you get them an answer? So I I don't, I think this is , I I think there's some real ethical issues here. You may have been able to skirt the law which I don't know about that either but ethically I don't think what you did here was
right. I don't think it was right to sit there and whether you brought yourself out of that process or not you should have gotten a waiver and made sure that was in place before he got the job. That should have happened and that happens in school districts all across the state where they make sure that happens because there's lots of small rural schools that deal with this and whether the law and I'm not sure what the law says on reappointments but I have never seen a resignation coming out of the executive session so you participated in an executive
Speaker 23
11:31
session, correct? Yeah we we talked about quite a
Representative Hope Duke
Unverified
11:34
few things in there yes yes but you can't talk to us about what you talked about so we don't know if you talked about your son's position or not nobodybody knows that but what we do know is you came out of executive session resigned and then your board hired him and then they reappointed you in the same meeting which I've never heard of that happening but your public had no notice what if there was other people who wanted that position and in my opinion I don't know what the law is. I always
assumed the law because the way I operated in a school districts where people have resigned is you went through the process of letting people apply or what now we have a more legal process in place but school districts had a process where other people from the community could participate in and your son-in-law may be a fabulous teacher and a fabulous coach and obviously you all are happy with them but this just puts a cloud over everything and and it puts a cloud over him and if you don't think that the other employees in that district don't notice stuff like that I'm afraid you guys are
kidding yourselves because they do and and the optics matter they matter a lot. it's what teaches our kids how to behave and so when I saw this I was shocked I was shocked at every level of it at the executive session participation, the resignation and the reappointment, the not getting the waiver I mean so many things. if you've served on 17 years and whoever your former superintendent is you knew you weren't dotting these i's and crossing these ts what was the urgency? why couldn't you wait to get the deE approval?
because you could have hired him with you being on the school board without there being any clouds to any of this and it does happen all the time. What was the urgency? don't think there
Speaker 27
13:18
was any urgencies I know there was other candidates that interviewed for the job and they went through the whole process so as far as being in the urgency I don't think there was any urgency to hire you was it just I mean are I find it hard to believe it was a lack of knowledge that you
needed to follow these certain procedures mean I went through the training and done all the stuff I was unsure of really the process that's why I I called Mr Keys on the phone said hey what do I need to do here and those were the options they give me I'm just a railroader and a farmer I mean I don't study law I never have and never will so that's that's why I picked the phone up and called Cody and said hey what do I do here? Well that ball
Representative Hope Duke
Unverified
14:04
got dropped somewhere and Lucas has been with the school board association for a while and has
given I'm sure countless school districts advice on this so it's hard for me knowing that he's given advice to school districts I work with that his advice was this procedure here so I mean I I do understand school board members are not paid it is a hard time consuming job and I I have a lot of respect and appreciation that's why I guess it bothers me particularly whenever something like this comes up because I feel like some of the school board members that are legislators now are constantly trying to you know support our school boards and appreciate the job that y'all are doing
sometimes against the attacks and so when something like this happens it it I take it really seriously because I think it does clap feed into the narrative that is out there sometimes that school boards aren't doing things above board and so I would just encourage you in the future that when in doubt make every phone call, call desi too you know ask them as well cause they would have told you you know what you need to do here and make sure you know you stay out of that exi stay
out of that whole little piece right that executive session piece stay out of all of it so that there's just no question whatsoever that anything impropriet improper was done because I be I understand your heart I understand the dilemma sometimes but it just it it was really not well done and really puts a cloud over that area. So I do thank you for your service. I thank you for coming down here hopefully that will help in the future to make better decisions
and make sure because I know you need those people that work within your district because their school board members families they care a lot about those kids in a different way and a different community so we need to have those but we just need to make sure that it always meets the smell test and I'm afraid this this action here didn't quite meet it thank yourison and brooks you
Representative Keith Brooks
Unverified
16:02
recognized thank you Mr Chair General thank you for being here just a quick question talks about the increase in compensation
11,236 was that over additional to what he had made in his role as a teacher and a coach or was that above what the previous principal was making no that's
Speaker 21
16:19
above what he was making as a teacher and a coach that's that's the principal salary perfect that that was what that would be thank
you any other members well gentlemen thank you for your time today. I I
I think Representative Duke summarized it well that that's our goal it's all of our goals is to do things the right way
and and I think that's the the probably biggest highlight of this is we want to not disparage any of you or or your principal that it's all earned on merit and done the right way and can stand the tests with transparency members with no further questions without objection this will be filed. thank you right you you're dismissed thank you thank you Mrfink thank
Speaker 12
17:08
contain findings which were referred to the applicable prosecuting
attorney and the AG Helena West helena school district had two findings finding one on October 10th of 2024, the district discovered that an employee's payroll direct deposits totaling4,451 dollars have been fraudulently deferred to another bank account after the employee contacted the district about not receiving their direct deposits it was determined that the district made the direct deposit change after receiving an email request from what appeared to be the employee's
email account without properly verifying the authenticity of the change request the district notified the finan institution however, as of our report date the funds had not been recovered. finding two during our review of payroll we noted the head football coach received the athletic director stipend in addition to being paid via time sheets for duties that appeared to be covered by this stipend . He was also paid $2400 for performing three years of offseason duties even though the
employment contract was for 240 days and this was done without documented approval of the superintendent during our review of payroll we also noted the executive director received an overpayment due to clerical errors that concludes the findings for Helena West Helena School
District. thank you Mrfink members any questions that objection this will be filed.
Speaker 12
18:39
let's go to the next next report is Mountain View School District on May23,2024 after an employee contacted the district about not receiving
payroll direct deposits the district discovered that the employees april and May deposits totaling $2400 and or $2422 and $2485 have been fraudulently diverted to two different bank accounts it was determined that the district made the direct deposit changes after receiving two separate email requests from what appeared to be the employee's email account without properly verifying the au authenticity of the change quest the district notified the financial
institution but they were unable to recover the funds and that concludes the findings for
Mountain View. Mrinnk, I do have a question just clarity on this was this a a cyber offence was this the employee had two different accounts is there any more detail on on the two different accounts on this so
Speaker 12
19:42
what happened is a bad actor sent an email to the school district bookkeeper acting as if they were an
employee of the school they asked for the basically the authorization form to be able to update their banking information did it one time then emailed again another time and said they needed to change it again sorry you know apologize for the inconvenience all that and change it to actually another bank so the the perpetrator the bad actor used two different banks to
Senator Jamie Scott
Unverified
20:24
Senator you're organized thank you do realize I'm not on the committee but this is two different school districts that this has occurred in is there anything we
need to look further into as far as you know this being a potential issue across the state of Arkansas you know as crimes are escalating via cyber it's just concerning to me that in the same report two different districts appreciate that Mr.innk can you comments sir actually prepared a report of
Speaker 12
20:55
all the findings for fy 24 school districts many of you should have received that
the committee it so if we share that with the
Speaker 11
21:09
full membership maybe full senate so here's what we had we had for the
Speaker 12
21:14
fy 24 school year 26 schools were impacted there were65 incidents that had some sort of unauthorized withdrawal which that could be anything to
like an altered check that was stolen in the mail that could be these situations where they're adjusting payroll information and it could also be related to vendors as well and so it the total was about648,000 dollars of that amount605,000 was recovered from the bank so the the net loss was basically around42,000 dollars ' s helpful context for sure
Representative Hope Duke
Unverified
21:58
and I think also senator that one of the things that if I remember correct Mr. Fink that they're seeing that in other areas like the cities and municipalities to in larger numbers this year than what we've had so I think a lot of people are looking at how to change their processes and I think we as a legislative body if we can come up with solutions for this too we definitely have to look at it because the criminals the bad actors are finding every which way they can I think a lot of schools are going to having them come in person and sign you know very old school style now if they want to change things you Senator English you're
Senator Jane English
Unverified
22:28
recognized I'm wondering so these people whose payroll checks were stolen did they get paid?
Yes they did. OK thanks. all right any other questions comments all right without objection this will
Speaker 12
22:47
be filed Mr.fink the next report is Nevada school district finding one during our examination of payroll records we noted that 11 employee was underpaid4,200 dollars from their contracted
amount finding two a review of credit card disbursements revealed $2800 in questionable transactions we noted transactions that had no supporting documentation we noted transactions that appeared to be allowable business purpose but did not have adequate supporting documentation and then377 dollars that were related to interest and late charges and so without adequate supporting documentation we could not verify the validity of these payments
and that concludes the findings for Nevada school district members
any questions or comments all right seeing none without objection we'll file this report ex t .
Speaker 12
23:42
OK the next two reports contain findings these were not referred to the prosecuting attorney or the attorney general and these did not contain repeat findingstaff recommends the committee take a moment to look over these findings and file as reviewed all right members take a few minutes just
to look at these with cabot and with Danville
a reminder these were not referred to prosecuting attorneys right
members any questions or comments? Yes Senator English recognized so67,000
Senator Jane English
Unverified
24:24
dollars is a lot of money is that one one person did that yes that
Speaker 11
24:36
engineer and architect firm the check was intercepted through the mail and it was altered by a bad actor so we're not going to refer
Speaker 94
24:48
these to the prosecuting attorney so they recovered the
Speaker 12
24:52
school recovered these funds and so that would have been in the in the bank's hands at that point and that's been our that's been our standard policy for the last four years at least if if
they recover the funds from the bank we typically do not refer those to the prosecuting attorney unless it involved someone within the actual school district and we don't believe that the bad actor was within the school district members any questions
or comments for Cabot or for Danville findings seeing none without objection those will be filed. the remaining report was one with
Speaker 11
25:32
no findings and that was the University of Central Arkansas and that is on your
Speaker 12
25:40
last page and staff recommends this be filed
as reviewed emb ers any questions comments with the nonfinding all right seeing none without objection that'll be that'll be filed members any other business to bring forward? all right thank you for your service today Record meeting from what we've had I really appreciate your your service we have and the reason for that is a lot of the reports and findings of the all the reports have been worked through for the majority's sake staff tells me that that will pick back up around March or
April so hopefully we'll have a nice streak of lighter meetings here so they'll come back with no findings with no findings hopefully as wellppreci everybody have a great week we're jerked
Agenda
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the September 11, 2025 meeting.
C. Review of Reports.
D. New Business.
E. Adjournment.
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - EDUCATIONAL INSTITUTIONS, Oct 9, 2025 | Agenda | 2 | Official source ↗ |
Speakers
Senator Tyler Dees Chair
Unverified
Speaker 2
Speaker 11
Speaker 12
Speaker 15
Speaker 21
Speaker 9
Speaker 27
Speaker 17
Speaker 23
Speaker 34
Senator Dan Sullivan
Unverified
Speaker 45
Representative Hope Duke
Unverified
Representative Keith Brooks
Unverified
Speaker 81
Senator Jamie Scott
Unverified
Senator Jane English
Unverified
Speaker 94