Legislative Joint Auditing-Educational Institutions
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Speaker 3
0:30
All right, we're going to call this meeting to order. Um, representative long, would
you be willing to open us in a word of prayer?
Speaker 9
1:05
If y'all will join us, please. Thank you. All right, we just want to
welcome everybody to House Education Legislative Audit today.
And members, thank you all for being here. Senator Deese, thank you. All right, I guess we're going to get started with the adoption of the minutes of the June 5,
2025 meeting. I need a motion. Motion by Representative Painter, second by Senator Sullivan. All in favor? Motion passes. Okay, we're going to move on now to the review
Senator Fredrick J. Love
Unverified
2:01
of reports. Mr. Fink. Thank you, Madam Chair, and good afternoon. Today, there are 70 educational audit reports to review.
Speaker 19
2:08
Of the 70 reports, 48 had no findings, and those are listed on the last two pages. As a reminder, the current standing committee guidelines is to invite entity officials for deferred audit reports, reports with repeat findings, and reports of school districts currently classified as fiscal distress. There is one deferred audit report from June, and there were three reports with repeat findings. We will begin with the Falk School District, which was previously deferred. Finding
one, a review of reimbursements to the superintendent revealed disbursements totaling $3,655 that appear constitutionally suspect and violate district policy. Additionally, we were unable to verify legitimate school business purpose for these expenses, $2,800 in mileage reimbursements for non-school trips, and $800 for airfare and travel insurance toward the superintendent and four students on a summer college tour. Finding two, unallowable costs paid
from the Child Nutrition Program totaling $843 were detected for the audit year. These costs were comprised of salary payments that should have been recorded in the district's general fund. And that concludes the findings for Falk School District. Thank you, and I believe we have representatives here
from the school district if they would
like to join us and take a seat at the end of the table and identify yourselves for the record.
Speaker 25
3:41
I'm Jim Bowie. I'm the superintendent at Falk. And I'm Brian Stout. I'm
the president of the school board at Falk. Thank you. We appreciate you all making the trip here to answer some questions and just kind of give us your perspective from the report. Do you have an opening statement or something you would like to share
Speaker 27
4:09
with the committee? I don't have any opening statement, but I'll answer any committee questions.
Okay, members, do we have any questions? Okay, Representative
Speaker 28
4:19
Painter. Can you explain, I think we had some questions from the last meeting, so I think if I remember correctly, one of the
Representative Stetson Painter
Unverified
4:27
questions from the last meeting is, can you explain the 2855 and mileage reimbursements for non-school trips? What were the non-school trips? Yes, it
Speaker 31
4:37
was explaining to me by audit that the trips I made had to fall under humanitarian expenses. In October of that year, we had a student who was on his way to school, and he was T-boned by an 18-wheeler.
And so he was transported to Arkansas Children's Hospital and was there long-term for almost three months. and so I made like 16 trips to Arkansas Children's Hospital, round trip, and my reimbursement is 52.5 cents a mile, and
Speaker 32
5:08
it's 167 miles one way. So it was all to one location, and audit says those are more humanitarian visits, not legitimate school business. Follow-up, Madam Chair.
Representative Stetson Painter
Unverified
5:22
And I appreciate that. I think it's good for a superintendent to care for students like that. I just want to make sure that 16 trips for one student, would it be a safe assumption possibly that you would do that
Speaker 24
5:34
for other students as well? I would do it for any of the students. Most of the time, I just have to
Speaker 31
5:41
go to St. Michael or LSU-Auchner in Shreveport when we have students who are admitted,
Speaker 32
5:46
but this was a greater distance because that's
Representative Stetson Painter
Unverified
5:49
where the hospital he was in. Sorry,
Chair
Unverified
5:51
Madam Chair. Have you done this before?
Speaker 31
5:54
Yes, that's what I'm saying, is that's pretty typical for me. If I have a kid who's in the hospital, I go to wherever
Speaker 37
6:00
the kid's in the hospital. Oh, okay. I'll get back
Senator Tyler Dees
Unverified
6:10
in the queue, Madam Chair. Thank you. Senator Deese, you're recognized. Thank you, Madam Chair. Thank you for being here, gentlemen. I actually don't have much of a problem with those visits. I love that you're doing it. We do need to make sure we're putting in the right buckets and categorizing them. It sounds like that was an issue. But I've got more concerns just kind of understanding the airfare and the travel to college.
Can you help us understand that? Was there
any relationship, relatives involved, just kind of understanding what
Speaker 42
6:34
the normalcy is of there? No, they were. There are four
Speaker 31
6:39
of our college kids used to. It was the Cooter Interest Inventory, but now it's Zello. So their interest area is wildlife management. We did a college visit to UT Knoxville based on that. My understanding from legislative audit was the violation was that I purchased and paid for insurance.
Our policy says you can't travel or you can't pay for travel insurance out of it for trips like that. And so I only reimbursed myself for the superintendent expenses. But on the booking, I did purchase travel insurance for the airfare, and the booking was my ticket and the student's booking. So the insurance covered my airfare and the student's airfare. Is it normal
Senator Tyler Dees
Unverified
7:28
for superintendents to attend with students to college visits?
Speaker 31
7:32
I've never heard of that. I organize a ton of opportunities at different times. Like I take our kids to Washington, D.C. in the past. I've taken them to wherever they need help getting. I take them there so that they have those opportunities to do that. I can't speak for other superintendents. I'd say it's probably not typical for a superintendent to be that hands-on, but it's kind of a small place with not a lot of hands-on day.
Senator Tyler Dees
Unverified
8:02
And this may be a question for, it was Ryan, I didn't catch your last name. Stout. Mr. Stout, for these visits, Does the school board review those beforehand? Is there an approval process
Chair
Unverified
8:16
on these types of travel? They're discussed. It doesn't show up as an agenda item or anything like that. And a lot of times the things like this that are going on, like you said, it's a small school, small community.
Senator Tyler Dees
Unverified
8:34
Everybody's pretty much aware of. So on these trips here, did the school board approve beforehand this travel or not?
Chair
Unverified
8:44
No, they weren't put forth on the agenda, but they get discussed when they happen. Not necessarily in a formal fashion, no. Okay, thank you. Representative
Representative Wayne Long
Unverified
9:03
Long, you're recognized. Thank you, Madam Chairman. I was wondering how many students and adults went on the trip, and was the $800, was that covering the students' airfare also?
Speaker 60
9:13
Thank you for asking, because that's what I
Speaker 31
9:16
really wish to make clear, is that I asked to reimburse myself for the superintendent travel. There's no way I got four kids myself lodging the event and the meals for $800. I wanted to point out that my out-of-pocket expense was extremely larger than $800, but I asked to reimburse myself for the superintendent travel, mainly because I had enough money in my superintendent travel budget to cover the trip.
I didn't have any money anywhere else in any other budget unit to cover any kid's travel for anything. So I just made it happen for them. When I came back, I asked to reimburse myself for my airfare. Again, I thought what threw it into the problem was that I had also purchased
Speaker 32
10:08
travel insurance, and our policy says I can't purchase travel insurance when I
Representative Wayne Long
Unverified
10:16
purchase airfare. Yes, you may. And how many children and adults went in total to the?
Speaker 24
10:21
Just me and the four guys for wildlife management. Thank you, Madam Chair. Senator English. So who paid for the students to come?
Speaker 69
10:44
I did. Out of your own pocket? Yes, ma'am. Thank you. Senator Sullivan.
Speaker 42
10:48
What kind of grade does your school get? How is your school rated? My high school just went from a C back to a B.
Speaker 31
10:54
My elementary just went from a D back to a C, and my middle school just went
Senator Dan Sullivan
Unverified
11:02
from a C back to a B. Okay, and you think that that travel is more important
than investing in educational endeavors, that you, the superintendent, go and put that money towards
Speaker 31
11:17
that rather than educational purposes? I thought it was very important to open guys opportunities to experience outside. Yeah, I thought $800 was a pretty fair deal and prudent expenditure
for the school district for kids to get to see the University of Tennessee, Knoxville, and their wildlife management program. I did. I thought that that was worthwhile. Well,
Senator Dan Sullivan
Unverified
11:39
it's your decision, your superintendent. That is correct. So as a school board president, are these trips pre-authorized or post?
So he goes on the trip and then says, reimburse me, Or do they put in an application, say, I'm going on the trip, I'm going to itemize where our expenses are, and then you approve it ahead of time, or is it post-trip?
Chair
Unverified
12:00
On this one, it was post-trip, but with it only being $800. So you're in the
Senator Dan Sullivan
Unverified
12:06
position of your superintendent being at $800, or you cover his cost? Yeah, well, I
mean, we were okay with covering that cost. So do you maintain that policy, that the superintendent and or others can travel at will without preauthorization? Well, for
Speaker 80
12:32
others, they would need his authorization.
Senator Dan Sullivan
Unverified
12:35
Okay, so who else is authorized to travel and then submit their travel cost after without preauthorization? who else is allowed to do that in the district there's no
Speaker 24
12:49
one that can travel my my contract says i can request reimbursement for travel incidental
Speaker 31
12:54
to the office of superintendent that's how we function all of my all of my travel reimbursements are post like when i do ball game duty like that well
Senator Dan Sullivan
Unverified
13:05
ball game duties are on the schedule so it's clear people know ahead of time
In your contract, you're going to be there for ballgames. Those ballgames are scheduled, so those are pre-authorized. I mean, that's your practice. It's your district. Taxpayers are paying for it, and if you're accountable for it, I understand. I think it's a very unusual practice to make as many trips as you're making when all of our schools have big financial needs. And I know some of those are personal, and taking care of your students is important.
I get that. And that's why you have a school board. And if your school board and you are all agreeing, then go ahead. I probably would not be voting for it, but I'm not on your school board, nor am I the superintendent. Thank you. Senator Deese. Thank
Senator Tyler Dees
Unverified
14:01
you, Madam Chair. That was kind of my line of questioning, just similar to Senator Sullivan. I'm not quite sure it may be legal to operate that way. I actually don't know if it is or not.
That may be another question to research. But either way, just from a best practices, I think that's what concerns me because everything I hear here passes the sniff test from, I think you're loving your students well and serving your district well. I really do. But I fear the best practices that are being actually practices actually brings it into scrutiny. And I don't want that for you guys because I think it hurts what's going on in your school district. If these lights get shined on,
and it looks like smoke, right? And I actually don't think there's fire there, but I want you guys to be protected. And that's actually why this kind of exists, this audit exists, is to make sure that you guys have a clean bill of execution of serving the community well. So I think that's kind of what I'm saying, at least today, is that you may want to check that policy so that you're not bringing in a concern from parents and students and the state in your business. Because I actually do think you're operating
probably in the right way into helping those students into the trips to go visit the students that have been in accidents. I believe you are operating in a good way, but I don't think it's being categorized and planned and transparently communicated through your district well. And that's probably a conversation with the school board and with the role. And so I would just highlight those things. I hope
it's not a legal issue. We're probably going to have to check that. But just for your own sake, so it doesn't get brought up to light publicly
in these audit committees, I would consider checking on that.
Senator Fredrick J. Love
Unverified
16:03
Senator Love. Thank you, Madam Chair. And I apologize for being late, so I think you all may have covered some
of this, but I wanted to go to staff because the last time we were here, it was like unrelated school. We categorized that as an unrelated school expense. So are we saying that as a committee, I'm not going to ask you any questions,
but are we saying that we're fine that the travel and everything was school-related? Because I think we had it categorized differently. So
Speaker 19
16:38
our findings, I may be misunderstanding what you're asking, but our findings are the same as it was last time. We, as audit, we are questioning the practice. There were 17 trips taken to the hospital to visit one student. We question that under law and policy.
Senator Fredrick J. Love
Unverified
16:58
All right. And so what was the word that we used? I thought it was unrelated school
Speaker 19
17:06
travel. In our finding, it says legitimate school business purpose. And then I may have said, yeah, school business purpose. That's what I have written down.
Senator Fredrick J. Love
Unverified
17:20
So it was unrelated. So actually the trips were related to students that were in hospital?
Speaker 19
17:27
Yes, the trips were to Children's Hospital for a student who was in the hospital.
Senator Fredrick J. Love
Unverified
17:33
Okay. All right. Well, then I'll just wave my questions. Thank you. Representative Mayberry. Thank you.
Speaker 99
17:41
I'm kind of the one that opened the can of worms. I'm sorry
Representative Julie Mayberry
Unverified
17:49
in the last meeting, but it just kind of caught my eye because I very much understand and love the intent. As one who has had a child in the hospital untold number of times through the years, I've never had a superintendent come.
And to me, that's really sweet that a superintendent would care enough to come to the hospital. And so I was concerned. I do understand that there seems to be a lot of trips, and I think that's where the line is. So that's what I was hoping we could have discussion over and just bring to light, What are the guardrails that we can do moving forward? This situation has happened. Is it going to happen again? I don't know. But as lawmakers, we need to just take this opportunity to see what should be done,
because I certainly don't want any superintendent hearing any of this conversation saying, oh, I can never again go visit a student that's in the hospital. And so I'm not saying we can solve this problem, but maybe this is something that we need to address legislatively if we can and would look to audit to see what maybe we can put in line to make sure that it's not abused and that there's some checks and balances on it. And that's really the purpose of why I was bringing it up
because I think it's super sweet. We want to make sure that our students are taken care of and loved. Was there family around, or is this a student who perhaps didn't have family there?
Speaker 31
19:24
There was only a mother and a working father. He had a senior still at my school that I took to see him. And a couple of times I took the dad because he worked graveyards, so he would work at night, and then I would drive him up there. But if I may also submit just one thing for the committee's consideration.
I also feel like you should not ignore that I live almost in Texas and Louisiana, and I feel like that if a Bryant or an Arcadelfia or a Benton or a closer superintendent had gone every day, it would not have raised anything at all. It's just that for me, one way to Children's is 167 miles, And so it appears to be very taxing,
but it wouldn't be the same for if a kid
Speaker 63
20:19
had gotten hurt at a school closer to Little Rock. Right. And you
Representative Julie Mayberry
Unverified
20:26
said that you were bringing family members up to visit, and they might not have been able to make that trip up here if they weren't with you. Is that correct? Yeah, I
Speaker 31
20:36
know that Dad could not have worked off Braveyard and come to see his son. Right. But I can't argue that that was largely humanitarian. I was not aware that we ax humanitarian expenses like that.
Representative Julie Mayberry
Unverified
20:48
I know now. Well, I appreciate you for bringing this to light. We just want to make sure that there's guardrails in place,
and I appreciate the sentiment that you want to take care of your kids and you want to make sure that family gets up there to see them.
Senator Fredrick J. Love
Unverified
21:08
So thank you. Senator Love. Thank you. So let me ask you this. Do you have any relations to the child? I do not. He's just one of my school kids. Okay.
And just the issues surrounding the case,
were they injured on campus? I mean, I'm not asking you about the injury. He was on his way to
Speaker 117
21:27
school on a Friday morning. And then, okay. Yeah. All right.
Speaker 31
21:35
I'll also add this just so you know the clearer picture and maybe even have a better understanding of what I'm about. But after his three months at Children's, his parents got him transferred to Craig Rehabilitation Hospital in Denver.
And on my own vacation time, I made three flights to make sure, January, February. In February, I took one of his friends with me on my dime. In March, I took two of his friends with me on his dime because his mom asked, can we get his friends out there? And I just, I'm trying to paint a clearer picture of what I'm trying to do for our kids and families down there and not sound an air of any fraudulent money scheming activity. That's what I'm trying to do.
All right. I appreciate that. Thank you. Thank you. So I've got a couple of questions, and I'm going to ask one to Mr. Fink. But I do want to note, I appreciate your heart. do appreciate I live in the northwest corner of Arkansas so I understand distance in a very similar way but I do also think that we have to be mindful of what the laws are there and policies are in there for a purpose and for a reason so Mr. Fink can you give any clarification because they've referenced the humanitarian portions of it and different things so what are the laws and the
policies that led you guys to the different conclusions that you did
Speaker 19
22:59
here if you don't mind thank you madam chair um so the school has a policy that says school funds shall not be used for political charitable or humanitarian purposes so we didn't come up with the humanitarian thing that that was in their own policy and then as far as law goes um ACA 617 211 talks about leave so absences away from school and when it describes school functions it says school functions means
athletic or academic events and then it follows that with meetings and conferences related to education so when we questioned this it was based on all those factors as well as our experience you know looking at reimbursements to superintendents at all of our schools it was unusual to us we are not used to seeing these that's why we question them and that was the basis for our questioning and i would
um add into that as i said being up in the northwest corner of the state we had a kid
very similar actually had been to been to craig as well this last year that was at children's and then eventually ended up at craig and as serving on the school board for those years i would appreciate my superintendent's heart and wanting to go but not necessarily using the district's funds to do that because they are specific funds and the now on trips quite frankly the question that I would have is the amount of time away as well because you also have a whole school district that you are managing. I don't I mean I greatly appreciate I know it means a lot to those parents
and those kids when they see a face when they're far away so I do appreciate that but I think part of the the issue here is in that I personally would have as a school board member is one the time away that you're out of the district when you're doing that and then also just the district funds being used for that and I would follow up to I have a question on the travel on that trip could you tell me did any of those students attend that university and and how many how often are there trips to
universities that require air travel mmm very
Speaker 42
25:09
rarely very unless we stop at georgetown like unless we put georgetown on our list when we're uh with
Speaker 31
25:15
the dc group then that would be the two times that we ever do ut knoxville and georgetown so do you keep track of far
as when you go on these trips that are i guess generally you're the the lead on that how many of the students end up going to those universities versus the ones that stay around in
that area in Arkansas, Texas, in that
Speaker 60
25:39
range? Yes, we track. Well, this is, I'm about to start my ninth year at VALC,
Speaker 31
25:44
so I have a keen survival rate there, but of our kids that have been gone off to school since I've been there, most of them end up at a state university or most likely a trade school most often is their deal. But what I want my students to understand is that they don't have
to move away and make a new life and a new home somewhere, but they need to know that they can if they want to. And I don't know where all you are from, but I'd very much like my kids to choose to be part of a small town community rather than have no option to be other than to be part of a small-town community. And sometimes I feel like my kids don't know that there are
Speaker 117
26:34
other places to be besides FALC USA. And I do appreciate that.
I think the members probably do as well. I think
that's safe to say. I think just, again, the question comes back, like it does for us here, is it's hard at earning taxpayer dollars that people's blood, sweat, and tears go to to earn those paychecks, pay those taxes, that we turn around and send back to the schools, and just making sure that they're effectively, and that's what audit is trying to do, is making sure they're effectively being used and utilized to help these kids excel beyond that. Representative Beatty, did you have a question? You're recognized.
Representative Sonia Eubanks Barker
Unverified
27:15
Thank you, Madam Chair. I guess my question's more for
leg audit, a couple of things based on some of the testimony of the superintendent. I see in the finding that you state that this is in violation of district policy, were the proper approval of the expenses, did that go through a committee that approved those, and were those paid by someone administratively on the school board or someone in the finance department that followed that, that actually wrote that check and reimbursed the superintendent for these
Speaker 19
27:49
expenses there we go okay sorry about that um so yeah that we that was kind of discussed earlier in that those expenditures were paid to the superintendent.
And then, like, the school board gets basically a general ledger out of AvScan. It's not super detailed. It's more just general descriptions. And then they approve those disbursements after the fact. So they're looking back at that previous month. I think that answers your question. Well, my then follow-up question is, were
Representative Sonia Eubanks Barker
Unverified
28:41
there any issues raised by the school board when they saw those expenses? Did they raise this as a concern, flag this as a concern at all?
Speaker 19
28:53
Not that we're aware of. I tried to look through the school board minutes to see if there was anything in there concerning
Representative Sonia Eubanks Barker
Unverified
29:03
these, and I didn't see anything. Because I guess my point is it could still be constitutionally suspect, but the violation of a district policy, if the district's actually approving and paying these bills and reviewing the process, then they kind of acknowledge that even though it's against district policy, they approve that. So I think that would, would, I mean,
they're putting their stamp of approval on, on that process. So that would be my concern about the district policy version of this. Um, and that might be that, yes, we know it may be, maybe they should acknowledge that, that this is contrary to district policy, but we're still approving the payment on it. It's not like the superintendent reimbursed himself for, for these expenses. Somebody approved those and followed the process that was at hand. And the other question, I may have missed this when I stepped out of the room, the, the trips made to the hospital, were any of these made during, uh, the, the school day
or were these all after hours or are on the weekend or on your time away i took the if i
Speaker 144
30:04
took the older brother i took him during the school day most of
Speaker 31
30:08
the time i work in the work in the cafeteria every day at lunch yeah and so most of the time it was either uh between 1 30 or 2 30 when i would take off to little rock and then i would stay until the evening time and then i'd get back home and run another school day through the cafeteria and then you know about you know a couple of times a week I
Representative Sonia Eubanks Barker
Unverified
30:33
heard the discussion about time away from the district things like that I would dare to say that you're not on a just a 40-hour a week time there at the district it sounds like you're your work weeks much longer than 40 hours if you're taking the time to do what you're doing with these students and so I would just compliment you for the heart that you have for your school and your district. I know what it's like for a small school district having graduated from a small North Louisiana high school that we had the same type of leadership.
Thank you. Yeah, Louisiana. I just want to compliment you on that side and the fact that I think these were approved by the district.
Speaker 31
31:17
I inherited a policy for my reimbursements, or practice, I should say, and so the superintendent has to pass their request to the
Speaker 42
31:25
federal programs coordinator, and the federal programs coordinator has to pass that approval to the district treasurer. So there's, like, two steps of approval
Speaker 31
31:37
before the check gets cut, and then the board secretary signs off on.
I didn't want the picture that I just say,
Representative Sonia Eubanks Barker
Unverified
31:46
hey, y'all owe me this, and I get a check. Well, that's kind of the point I wanted to make for the committee is this was not something that you were doing. There were
Representative Julie Mayberry
Unverified
32:01
multiple hands and players in this that were involved beyond just yourself. Thank you, sir. Representative Mayberry, you're recognized. Thank you. I'm just trying to see if I can ask, again, kind of legally and how
it works. if a superintendent were to come to Little Rock because a student was receiving some type of athletic award,
is that a reimbursable expense? So we would
Speaker 94
32:23
look at their policy, and then we would look at Arkansas Code. Arkansas Code describes it, school functions as
Representative Julie Mayberry
Unverified
32:34
athletic or academic events. Okay, so if it was coming to the Capitol to receive 16 different times, a student receiving an athletic award, scholarship, whatever, this would all be perfectly fine.
But because the child was sick and in the hospital, it's not. I mean, I'm just trying to think through. Again, I want guardrails there, but when you have that kid sick in the hospital, and it sounds
like there might still be problems. You said the child went on to the rehab center. What's
Speaker 24
33:17
the condition now? He came back. He just completed his junior year, and now he's one of my summer workers.
Okay. He's one of my summer workers.
Representative Julie Mayberry
Unverified
33:28
And working hard, probably working harder because he saw your
Speaker 24
33:32
heart. And still has challenges to overcome. I'd just like
Representative Julie Mayberry
Unverified
33:38
to think about the message that we're sending, and maybe there's something that we can do to, you
Chair
Unverified
33:46
know. I'll add to that this was a pretty big event that happened in our community when this young man had this accident. And there's nobody in the board and not anybody in the district that I'm aware of
that has ever had a problem with the amount of attention that Dr. Bowie has put towards any kind of help that he's given to this young man or his family. And his friends, you know, to that matter. This was a popular kid, a lot of friends. It didn't come from a family with a lot of money like most of our community does. And the actions that he's shown, the ones that are showing up in this report
are specifically the reasons why we enjoy having him as our superintendent down there. Senator Sullivan, you recognize? You
Senator Dan Sullivan
Unverified
34:55
know, I think guardrails are in place. They just read the guardrails. Those are the guardrails. The board's expected to follow them. You're expected to follow them. And when we find out that they're not through an audit, and an audit has no heart, we just judge how you're spending the money.
And when taxpayers pay the money, they expect us to follow the guardrails that are in place. And I think the audit clearly shows we got outside the guardrails, right? Okay, so we got outside the guardrails, and the reason you're down here is to say if the legislators want to change the guardrails and say follow your heart and spend your money, but that's not what the guardrails are now. So I appreciate what you do, glad things worked out, but I think the board needs to take an active role in making sure that travel is approved and we're following the guardrails.
And I hope you're having meetings to make sure we're doing that, are you? Yes, we meet every month. All right, that's all. I'm
done. Thank you. Representative Brooks. I would just follow along with what Senator
Sullivan said there just a little bit. I appreciate your heart, and I think it's a good point that the guardrails are in place. Those are the rules that we are to play by. We may, audit oftentimes makes us take a look at whether we need to change things
or make some adaptations to it. I would encourage the board, especially when it comes to overnight travel and things like that, to maybe be ahead of the game on that instead of coming back prior, I mean, have prior authorization on those types of trips rather than coming back afterwards? I think that's just a good procedure period that you need to know when people are leaving your district and where they're going and what they're doing and who's supervising and all those types of things. Is that how you do it currently or is it afterwards that you
Speaker 80
36:53
make those types of approvals? For the most part, I mean, we don't approve every travel item that's presented
Chair
Unverified
36:59
individually I mean you're on the you've been on the board yourself I mean you know how long a board meeting
Speaker 50
37:07
could could last if if if you go through
Chair
Unverified
37:11
each item individually before you approve it's it's the expenditure but it's like I said I mean the board was aware of these trips and nobody on the board had problem with them. Um, when the reimbursements were added as one of the line items in our
budget, it was, it was, it might have been mentioned. It might have been slightly discussed, but the budget for that month was approved. Yes.
Speaker 54
37:44
So these were, I guess, technically they They were approved
along with everything else. All right. Seeing no other questions without objection, Representative Long.
Representative Wayne Long
Unverified
38:01
Thank you, Madam Chairman. I was wondering, this question is for the school board president? Yes, sir. What's the school's guidelines on number of adults required for, like, overnight trips and that type of thing? I personally, I don't know that exactly, but
Speaker 54
38:20
is there a policy as far as the number of adults?
Speaker 60
38:26
I don't know that we have one. Like when I
Speaker 32
38:29
do my D.C. trip, I go for the guys, and then I get my federal programs as a female,
and I take her for the girls. but I don't usually take – if it's just one gender, I just take one. Like sometimes our FCCLA wins awards and they have to go places, and that's such a small group sometimes that I've sent her with mixed genders. It's just according to the – I guess just the situation, whether we feel like we need to take somebody or not. If FFA goes, that's a lot of boys and a lot of girls, So we try to get the FFA guy and then maybe, like, a parent, a female parent that would go for it to be the girl chaperone.
But there's not a written policy. We just try to be prudent with
Representative Wayne Long
Unverified
39:15
who we send. Thank you, because mainly I was wanting to make sure everybody's reputation was protected. And, you know, of course, by being overcautious, you know, of course, that would be the way to do that. So I'd suggest maybe the school look into establishing a policy so everybody kind of knows that, you know, under whatever circumstance, what they're expected to do. And thank you for your answer. Thank you.
Thank you, Madam Chairman. Thank you. And I appreciate you all taking the time to come up here and answer the questions. And please know we're just trying to do our job down here and stay within the guardrails. And, you know, those who are put in place because there were issues or trying to prevent issues, it's not a matter of trying to be accusatory. is just trying to protect and oversee the taxpayers' dollars, the students, and in the end of all, you guys as well, to make sure that we're all on the same page. So seeing no other questions, without objection, we'll file the report.
Speaker 19
40:12
Thank you all. Thank you. The next report to review is Pine Bluff School District. This report contains a repeat finding. The superintendent reached out to us at the end of June and let us know that the district had an obligation scheduled for today. So staff recommends we defer this report to the September meeting so that the superintendent can be present to answer questions from the committee.
Speaker 64
40:45
Okay, we have a motion from Senator Sullivan, second from Senator Deese. All in
Speaker 19
40:55
favor? Aye. Opposed? Motion carries. The next five reports contain findings that were referred to the applicable prosecuting attorney and attorney general. The first was Clarendon School District. On September 20, 2023, the district discovered that employees' payroll direct deposit totaling $3,100 had been fraudulently diverted to another bank account after the employee contacted the district about not receiving her direct deposit.
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 financial institution. However, as of the end of our report, the funds had not been recovered. And that concludes the findings for Clarendon School District. Without objection, we'll file the report.
Next is the Gentry School District. Finding one on June 20th, 2024, the district discovered that an employee's payroll direct deposit totaling $1,600 had been fraudulently diverted. 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, and the district was unable to recover the funds after notifying law enforcement and the financial institution. Finding two, the district discovered and we verified unauthorized credit card charges
totaling $3,000 on the district's credit card between October 14th and October 17th of 2023. These charges were disputed by the district and in November of 2023, the amounts were reimbursed by the credit card company. And that concludes the findings for Gentry School District. Without objection, we'll file the report. Next report is Harrisburg School District. On January 8, 2025, a vendor contacted the district about a payment of $1,500 that had not been received.
The district discovered that the check issued in November of 2024 had cleared its bank account, and the payee had been altered. The bank was notified, and a police report was filed with the Harrisburg Police Department. As of our report date, the district had not recovered the funds. That concludes the findings for Harrisburg. So
I'm going to pause here for just a second because, as I'm sure many of you all
Speaker 89
43:25
have noticed, oh, I'm sorry, Senator Love, go ahead. Well, yeah, you said $1,500,
Speaker 19
43:30
and this is $15,000. My mistake, $15,268.
Okay. All right. Are you good? Yeah, I'm done. Okay. But I'm sure many of y'all have noticed the number of these that have the funds that are diverted. And could you talk
Senator Fredrick J. Love
Unverified
43:51
a little bit about that to the members, please? So if you've served on some of the other committees
Speaker 19
43:56
as well, I know you've seen these. A couple years ago, actually, we had a number of them. And at the time, this committee sent a letter to ADE.
I think Senator Irvin actually was at that meeting, and notifying them of the issue. And so ADE put out a commissioner's memo at the time saying, hey, we've got a cybersecurity risk. You need to start putting in protocols or controls. When someone asks for their deposit information to be changed, don't just accept it through email. What we really recommend is that it happens in person, if at all possible, because then the form can get filled out.
You can actually see the person get the signature on some of these, like this $15,000 one. In this instance, I believe this check, let's see, it was actually deposited in Tennessee at the Navy Federal Credit Union. They actually have it on security film. They see the person depositing it, see the scheme involved. And so it has been reported to the police department. We also report these to the prosecuting attorney and the AG as well when there is a loss of
funds by the school. And so it's a big problem. I presented in the fall to a group of school business officials, told them that this is a huge issue, told them that if you can, you want to get positive pay instituted on your bank and you want to have the vendor matching with it. That's a key component to that. And then I will present next week at ADE Summit, and I will again try to just keep hitting this because it is such a huge issue.
And today alone, we've got the unauthorized withdrawals that we're noting on education institutions. We have one on the state agency side, and then we also have them on the city-county side. So it's a big issue. And one thing I was telling the chair about is I read a statistic that since the pandemic, check fraud's gone up 385%. And so we're trying our best to get the word out and to make our entities aware that we ought it.
Representative Stetson Painter
Unverified
46:19
Representative Payne, are you recognized? Thank you, Madam Chair. Just a question
for staff. Just curious, do we keep a track of how much taxpayer money we lose, whether it's in education, state agencies, city, county, local, during audit? Do we keep track and make a report of how much money we lose a year based on this? We
Speaker 94
46:43
have not in the past. We have a couple of different things that we
Speaker 19
46:48
will track, like the PA disposition report that goes to the full committee.
security incidents. I know we track those. This is not something specifically that we track, but I could probably pull it for education institutions pretty quickly. If we could, maybe at the end
Representative Stetson Painter
Unverified
47:04
of the year, just to see, I would be curious to see how much taxpayer money we have lost in our schools based on
situations like this. And I think, I'm afraid we're going to be pretty shocked by the number. And I appreciate staff doing that.
Speaker 16
47:24
I will work on that for the audit cycle we just finished, and I should be able to
provide that for the education institutions. Thank
Senator Missy Irvin
Unverified
47:36
you. Senator Irvin? Thank you, Madam Chair. And I thank you for the report. And, yes, I mean, it was shocking, you know, that meeting that we were in and all the money that's just being stolen from taxpayers in this reform. I'm not wondering. I think that probably full audit could request a report that would be comprehensive.
So you're doing it from the education side of things. But I think in full audit it should be requested that a full report be made by legislative audit on all the monies that are being stolen from the taxpayers of the state of Arkansas and all different, whether it be through education state agencies. So I probably won't be here tomorrow, but that's something maybe you could do tomorrow during audit, just a suggestion. But the second thing is I think we should look at some sort of just mandate for schools
that they cannot change something unless it's done in person because the memos are great and the commissioner's letters are great and all that you're doing is fabulous and great and needed and necessary. But at the end of the day, if it's still not being adhered to, we've got to say you cannot do this. It's against the law. I'm just to that point because we've got to stop the bleeding somehow, some way. So I think it's really important that we look at, you know, what exact rules we need to have in place for schools versus just a suggestion or a memo.
We may be needing a little bit more forceful, just
Senator Fredrick J. Love
Unverified
49:19
a suggestion. Thank you. Senator Love, you're recognized. Thank you. And to staff, how many of these findings were committed
after you issued your memo? Let me
clarify. We did not issue a memo. So how many of these findings were after the commissioner or the secretary issued the memo?
Because I think that would be important to know. Like if, for instance, if he issued his memo, let's say, what date is this, June of 2024? If he issued his memo before that, then that would let you know that we have a pervasive problem. So if the memo was issued after this, then, but I would just be interested to know how many of these findings were after he issued the memo. I think most of them were after.
Well, then that lets you know that we have a problem with the communication. Because if these findings were after he issued his memo, then that means the people are just not
Speaker 189
50:27
listening. if you could in that report can you put us the date
Representative Stetson Painter
Unverified
50:33
that that commissioner letter came out and then maybe put an asterisk or some kind of notice of all the amounts that
were after that and that would yeah i think i think that
Senator Fredrick J. Love
Unverified
50:46
i mean because i think that's very important to know if
If people are really just ignoring these commissioners MOs, if they're adhering to them, I mean, to me that would be important because then we need to look at the institutions and say, all right, now, why is it that you just ignored what the commissioners put out? And I think that's important. Thank you, Madam Chair. Thank you.
Representative Sonia Eubanks Barker
Unverified
51:15
Representative Bader, you recognized? Just want to add to this report, or make the request, that in addition to the date of the
item and the loss, the date of discovery as well, because I think that plays more in line with what's going on and paying attention, because the sooner that you're able to capture this, the more likely you are to be able to recover your funds and money, so I think that's a vital, important aspect of the reporting, is the timing of discovery, that that item was not a proper item that was diverted or taken through the account. Because a lot of time, it's a month or a month and a half
or two months later that these things come to light. So either a vendor doesn't, that notifies that, hey, we didn't receive payment, and you're like, yes, you did, and then you start your research. So I would think that that's a vital, important
part of the report as well. Thank you. Thank you. I'm also
wondering, the report or the memo went out to the superintendents. Do our school board members, are they
Speaker 19
52:22
notified about any of this? I wouldn't think they'd be on the list of recipients for a commissioner's memo.
I don't know that because that's not my department, but based on my limited knowledge, I would say no, the school board members, unless they were told specifically by someone with the school district superintendent business manager I'm not sure they'd be aware I
think that would be helpful to make sure that they're making sure the district's doing their
due diligence I don't know how we are going to best we may want to explore and try to find out some ways to best communicate with those school board members but surely if seven members plus the superintendent
is getting that information, they would be looking to make some changes, so. Any
Representative Wayne Long
Unverified
53:11
other? Representative Long? Thank you, Madam Chairman. The, I guess it was Gentry School, no, I'm sorry,
Harrisburg School, on the check that was cashed in Tennessee, did they have any idea at what point the check was intercepted by this person, it wasn't, I guess it wasn't an employee of the school. So
is it like intercepted in the mail or what do they
Speaker 19
53:40
think? Thank you. I don't think they were, I'd have to go back and look at that police report again. I don't think they knew when it was intercepted
though. Any other questions? Seeing none, without objection, we will file the
Senator Fredrick J. Love
Unverified
54:01
report. And the next report was Highland School District.
Speaker 19
54:04
The district used just under $3,800 in general activity funds for staff meals without a documented business purpose in conflict with Arkansas Constitution as interpreted by the AG. That concludes the findings for Highland School District. I have a quick question on this one. So
the issue with this was because it was for Teacher Appreciation Week? Is this the one?
Speaker 19
54:33
So, no, that was their explanation for why they did the meals.
Our issue with it is that there was no documented business agenda or business purpose for the meals.
So if they had done this, say, in
line with parent-teacher conferences, Would that be out of line or
Speaker 19
54:56
inbounds? If they had documentation that they were conducting school business and they chose to provide meals, most likely we
Speaker 94
55:04
wouldn't have an issue. We would run it through our legal counsel, though, to see.
All right, without objection, we will file
Senator Fredrick J. Love
Unverified
55:18
the report. The final report, which contained findings that were sent to the PA, And the AG
Speaker 19
55:24
is Pulaski County Special School District. Finding one, an unauthorized withdrawal totaling $2,500 was made from a district account. District personnel discovered the unauthorized withdrawal and funds were recovered from the bank. Finding two, in January of 2024, the district sent the ROM payroll file to the bank for distribution of funds to employee accounts.
And although the transaction was reversed on the same day, the full amount could not be recalled due to insufficient funds and recipient accounts. Specifically, the district was unable to recover $4,600 that was inadvertently paid to former employees. Finding three, the district received federal reimbursement of $80,750 from the Emergency Connectivity Fund for expenditures that were already reimbursed by the ARP ESSER fund.
And that concludes the findings for Plassie County Special School District. All right,
without objection, we will file the report. The next two audit
Speaker 19
56:36
reports contained findings which had repeat findings. Both the Brinkley School District and the Deer-Mount Judy School District reached out to us ahead of the meeting and let us know they had previous obligations so they could not be here,
asked the committee if they would defer the report to September.
Without objection, we'll defer the report
Senator Fredrick J. Love
Unverified
57:10
until the next meeting. The next 13 reports contain findings that were not referred
Speaker 19
57:14
to the PA or the AG and they did not contain repeat findings.
Staff recommends that the committee take a moment to look these over and file en masse as
reviewed. Senator Irvin, you're recognized. Thank you.
Senator Missy Irvin
Unverified
57:50
You had mentioned something about positive pay. I'm not familiar with this, but this is a protection against these types of things. Okay, can we not just mandate by rule that any school district that is with a bank, that they enroll in this? I know you can't answer that question, but is there any kind of a recommendation from this committee perhaps that could be made
that all school districts in dealing with financial institutions must be entered into a positive pay plan to prevent FOD? A, my question is to staff, can this committee make that recommendation? I'm sure that we probably could, and then be, you know, I guess put that forward, whether it be through maybe a rule change to the Department of Education, through legislative council or something to that manner.
Speaker 19
58:54
Yeah, I think it seems like we did something a couple years ago where we submitted a recommendation. It might have been to insurance and banking maybe or commerce. And so if this committee chooses to do that, we can certainly direct it to where you tell us to. But that's the will of the committee as far as just a recommendation being made. All
Senator Missy Irvin
Unverified
59:22
right. Well, how long do you think it would take for you to get your report done on the report that's been requested?
Senator Missy Irvin
Unverified
59:36
it pretty quickly. Well, I'll defer this recommendation until we have that report in hand. And then I think you have plenty of evidence to go forward. And I would say make a recommendation from this committee specifically that can be brought forward, you know, to full legislative council as a rule change for the Department of Education and all school districts. Seems like it's a solution that you're discovering here. So just something maybe I won't make that recommendation today,
but I think it's something that we need to think through as a committee.
Well, it may be something since it's not an issue limited to our education institutions, we may want to look at it broader. Is
there a cost for them to enroll in positive pay? I believe
Speaker 94
1:00:18
there is. I don't know what that cost is. That's something I'm sure we can find out. It may be that some banks don't charge. I do not know. let me take
Speaker 19
1:00:31
back what I just said. I'm not sure if they charge for that or not, or if they add
the vendor component that I was mentioning earlier, where they have to match the vendor. I don't know if that might be additional, so just not something I
know. Any other questions? All right, then without objection,
Senator Fredrick J. Love
Unverified
1:00:53
we'll file the report. The remaining 48 reports that are listed on the last two pages consist of
Speaker 19
1:00:58
audits with no reportable findings, and staff recommends that these reports be filed en masse as reviewed.
Members, I encourage you to take a second. It's always nice to recognize the ones that did not have any
issues, and if you have a school district that you want to recognize, may it take a minute to do that here? I'd be happy to let you have that opportunity because I do think it's important we recognize the ones that did well on that too. So I'll give
Senator Fredrick J. Love
Unverified
1:01:30
you just a second to look through that, and then we'll go ahead and file them. Senator Love, you're recognized. I know that you just passed this item, but I'm looking at page 12 or 14 about the Northwest Arkansas Service Cooperative.
It says the cooperative has uninsured and uncollateralized bank deposits, totaling $382,000. I'm trying to figure out
how would that be. So they went above the FDIC
Speaker 19
1:01:56
limit and didn't have enough pledge collateral at the bank to cover those. Sometimes that can happen if they haven't spoken with the bank at June 30.
Agenda
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the June 5, 2025 meeting.
C. Review of Reports. Refer to the Synopsis
D. New Business.
E. Adjournment.
500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov
LEGISLATIVE JOINT AUDITING COMMITTEE ARKANSAS LEGISLATIVE AUDIT JULY 10, 2025 STANDING COMMITTEE ON EDUCATIONAL INSTITUTIONS
AUDIT REPORTS AUDIT REPORTS AUDIT REPORTS
Fouke School District Huntsville School District Cedarville School District Miller County Madison County Crawford County June 30, 2024 June 30, 2024 June 30, 2024
Pine Bluff School District Magnolia School District Crowley’s Ridge Education Service Cooperative Jefferson County Columbia County Poinsett County June 30, 2024 June 30, 2024 June 30, 2024
Clarendon School District Mansfield School District Cutter-Morning Star School District Monroe County Sebastian County Garland County June 30, 2024 June 30, 2024 June 30, 2024
Gentry School District McGehee School District DeQueen-Mena Education Service Cooperative Benton County Desha County Sevier County June 30, 2024 June 30, 2024 June 30, 2024
Harrisburg School District Nashville School District Des Arc School District Poinsett County Howard County Prairie County June 30, 2024 June 30, 2024 June 30, 2024
Highland School District Northwest Arkansas Education Service DeWitt School District Sharp County Cooperative Arkansas County June 30, 2024 Washington County June 30, 2024 June 30, 2024 Pulaski County Special School District Dierks School District Pulaski County Paragould School District Howard County
June 30, 2024 Greene County June 30, 2024
June 30, 2024 Brinkley School District Dumas School District Monroe County Black River Technical College Desha County
June 30, 2024 Randolph County June 30, 2024
June 30, 2024 Deer/Mt. Judea School District Elkins School District Newton County Alpena School District Washington County
June 30, 2024 Boone County June 30, 2024
June 30, 2024 Bauxite School District Emerson-Taylor-Bradley School District Saline County Arkansas River Education Cooperative Columbia County
June 30, 2024 Jefferson County June 30, 2024
June 30, 2024 Concord School District Eureka Springs School District Cleburne County Berryville School District Carroll County
June 30, 2024 Carroll County June 30, 2024
June 30, 2024 Corning School District Foreman School District Clay County Bismarck School District Little River County
June 30, 2024 Hot Spring County June 30, 2024
June 30, 2024 Drew Central School District Gurdon School District Drew County Booneville School District Clark County
June 30, 2024 Logan County June 30, 2024
June 30, 2024 Earle School District Harrison School District Crittenden County Cave City School District Boone County
June 30, 2024 Sharp County June 30, 2024
June 30, 2024 Gravette School District Hermitage School District Benton County Cedar Ridge School District Bradley County
June 30, 2024 Independence County June 30, 2024
June 30, 2024
PAGE 1 OF 2
AUDIT REPORTS (CONTINUED) AUDIT REPORTS (CONTINUED) AUDIT REPORTS (CONTINUED)
Hillcrest School District Sloan-Hendrix School District Lawrence County Lawrence County June 30, 2024 June 30, 2024
Jackson County School District South Pike County School District Jackson County Pike County June 30, 2024 JUNE 30, 2024
Jessieville School District Southwest Arkansas Educational Cooperative Garland County Hempstead County June 30, 2024 June 30, 2024
Lafayette County School District Star City School District Lafayette County Lincoln County June 30, 2024 June 30, 2024
Lamar School District Trumann School District Johnson County Poinsett County June 30, 2024 June 30, 2024
Lead Hill School District Two Rivers School District Boone County Yell County June 30, 2024 June 30, 2024
Lincoln Consolidated School District Valley View School District Washington County Craighead County June 30, 2024 June 30, 2024
Monticello School District Westside Consolidated School District Drew County Craighead County June 30, 2024 June 30, 2024
Norfork School District Westside School District Baxter County Johnson County June 30, 2024 June 30, 2024
Ozarks Unlimited Resources Educational Cooperative Boone County June 30, 2024
Palestine-Wheatley School District St. Francis County June 30, 2024
Pea Ridge School District Benton County June 30, 2024
Prescott School District Nevada County June 30, 2024
Rector School District Clay County June 30, 2024
Searcy Special School District White County June 30, 2024
Siloam Springs School District Benton County June 30, 2024
PAGE 2 OF 2
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - EDUCATIONAL INSTITUTIONS, Jul 10, 2025 | Agenda | 3 | Official source ↗ |
Speakers
Speaker 3
Representative Hope Duke Chair
Unverified
Speaker 9
Senator Fredrick J. Love
Unverified
Speaker 19
Speaker 25
Speaker 27
Speaker 28
Representative Stetson Painter
Unverified
Speaker 31
Speaker 32
Speaker 24
Chair
Unverified
Speaker 37
Senator Tyler Dees
Unverified
Speaker 42
Representative Wayne Long
Unverified
Speaker 60
Speaker 69
Senator Dan Sullivan
Unverified
Speaker 75
Speaker 80
Speaker 99
Representative Julie Mayberry
Unverified
Speaker 63
Speaker 117
Representative Sonia Eubanks Barker
Unverified
Speaker 144
Speaker 94
Speaker 50
Speaker 54
Speaker 64
Speaker 89
Speaker 16
Senator Missy Irvin
Unverified
Speaker 189
Speaker 178