Legislative Joint Auditing-Educational Institutions
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- October 2, 2026
Speaker 9
1:07
be willing to open us in a word of prayer you'll join us please thank you right we just want to welcome
everybody to houseducation legislative audit today and members thank you all for being here senator deeses thank you. right I guess we're gonna get started with the adoption of the minutes of the June52025 meeting. I need a motion please motion bypresentative
Painter second by Senator Sullivan. all in favor motion passes OK we're gonna move on now to the review of reports Mr Fink. thank you madam chair and good
Senator Fredrick J. Love
Unverified
2:09
afternoon today there are70 educational audit reports to review of the 70
Speaker 19
2:13
reports48 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 report from June. and there were three reports with repeat findings we will
begin with the Fou school district which was previously deferred finding one a review of reimbursements to the superintendent revealed disbursements totaling3,655 dollars that appear constitutionally suspect and violate district policydditionally we were unable to verify a legitimate school business purpose for these expenses $2800 in mileage reimbursements for nonschool trips and $800 for airfare and travel insurance toward the superintendent and for 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 Fouke 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
Speaker 25
4:00
the record I'm Jim Boy I'm the superintendent at Foc. And I'm Brystad I'm
the president of the school board thank you we appreciate y'all making the trip here to answer some questions and just kind of give us your perspective on from the report do you have
an opening statement or something you would like to share
Speaker 27
4:14
with the committee? I don't have any opening statement but I'll
answer any committee questions. members do we have any questions
Speaker 28
4:24
OK Representative painter can you explain I think we had some questions from the last meeting so I think if I remember correctly one of the one
Representative Stetson Painter
Unverified
4:32
of the questions from the last meeting is can you explain the 2855 in mileage reimbursements for nonschool trips can you what were the nonschool trips
Speaker 31
4:42
it was explained to me about audit that the trips I made were had to fall under humanitarian expenses andoctober of that year we'd 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 hospitalspital and was there long term for mo s t three months and so I made like 16 trips to Arkansas Children's hospitalspital round trip and my reimbursement is
Speaker 32
5:15
525 cents a mile and it's 167 miles one way so that it was all to one loca all to one location and audit says those are were humanitarian visits not legitimate school business. follow up
Representative Stetson Painter
Unverified
5:25
manager and 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 as safe assumption possibly that you would do that for other students as well would do it for
Speaker 24
5:39
any of the students I go most of the time I just
Speaker 31
5:45
have to go to Saint Michael or LSU auctioner in Shreveport when we have students who are admitted but this was a
Speaker 32
5:51
greater distance because that's where the hospital he was in and and this
Representative Stetson Painter
Unverified
5:54
is and sorry ma'am chair it so have you done this
Chair
Unverified
5:56
before? Yes, that's what I'm saying is that's pretty typical for me if I have a
Speaker 31
6:00
kid who's If I have a kid who's in the hospital I go to wherever the kid's in the hospital I'll get back in the queue
Speaker 37
6:05
ma'am thank you des you recognized thank you for being here
Senator Tyler Dees
Unverified
6:16
gentlemen I actually don't have much of a problem with with those visits I love that you're doing it we do need to make sure we're we're put in the right buckets and categorize them it sounds like that's that was an issue but I've got more concerns just kind of understanding the the airfare and the travel to college can you help us understand that was there any relationship relatives involved just
kind of understand what what the normalcy is of there they were they're four
Speaker 42
6:39
of our college kids used to it was the cooer interest inventory but now it's ello but
Speaker 31
6:49
so their interest area is wildlife management. we did a college visit to UT Knoxville based on that the my understanding from legislative audit was the violation was that I purchased paid for insurance. our policy says you can't travel or you can't pay for travel insurance out of it for chips like 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 students booking so the insurance covered my airfare and the students airfare is it normal
Senator Tyler Dees
Unverified
7:33
for superintendents to to attend with students to college visits I've never heard
Speaker 31
7:38
of that organized a ton of opportunities at different times like I take our kids to Washington DC in the past I've taken them to to wherever wherever they need
help getting I take them there so that they have those those opportunities to do that I don't 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 you know
Senator Tyler Dees
Unverified
8:07
not a lot of this may be a question for it was Ryan I didn't catch your last namesout Mr Stout for these visits are does the school board review those beforehand as their approval process on on these types of travel
Chair
Unverified
8:22
they're discussed it it doesn't show up as an the things like this that are a small small schools small So on on these on these trips here did the school board
Senator Tyler Dees
Unverified
8:41
approve beforehand these these these this travel or not no they weren't put
Representative Wayne Long
Unverified
8:59
thank you Representative Long you're recognized I was wondering how many students and adults went on the trip and was the $800 is that covering the students airfare also
Speaker 60
9:18
thank you for asking because that's what I really
Speaker 31
9:21
wish to make clear is that I I I asked to reimburse myself for the superintendent
travel there's no way I got4 kids myself lodging the event and the meals for $800 I I want to point out that my out of pocket expense was extremely large larger than $800 but I asked to reimburse myself for the superintendent travel mainly because that 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
Speaker 32
10:13
purchased travel insurance and our policy says I can't purchase travel insurance when I
Representative Wayne Long
Unverified
10:21
purchase airfare. you may how how many how many children and adults went in total to the me
Speaker 24
10:26
and the and the four guys for wildlife management
Speaker 69
10:32
Sa English I did out of your own pocket Sarah Suulllivan what kind of
Speaker 42
10:53
grade does your school get? how's your school rating my high school my high school just went from ac back to a B my elementary just went from a D
Senator Dan Sullivan
Unverified
11:07
went from ac back to a B. OK and you think that that travel is more important than investing
in educational endeavors that you the superintendent go and put that money towards that rather than educational
Speaker 31
11:22
purposes I thought it was very important to open guys opportunities to experience outside yeah I thought I thought $800 was a pretty fair deal and
prudent expenditure for the school district for for kids to get to see the University of Tennessee Knoxville and their wildlife management program I I did I thought that that was worthwhile it's
Senator Dan Sullivan
Unverified
11:44
your decision you're the superintendent that that is so as a school board president of these trips preauthorized or post
so he goes on the trip and then says reimburse me or do they put in an application and say I'm going on the trip. I'm gonna itemize where our expenses are and then
you approve it ahead of time
Chair
Unverified
12:05
or is it posttri? on this one it only being $800 so you're in the position
Senator Dan Sullivan
Unverified
12:11
of your superintendent being at $800 or you cover his cost yeah well I
mean we were OK with covering so have you do you maintain that policy that the superintendent and our others can travel at will without preauthorization well
Senator Dan Sullivan
Unverified
12:40
if it was others they would need his authorization 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
Speaker 24
12:54
district there's no one that can travel my my contract says I can request reimbursement for travel incidental
Speaker 31
12:59
to the office of superintendent that's how we function all of my all of my travel reimbursements are post like
Senator Dan Sullivan
Unverified
13:10
When I do ballgame duty like the ballgame 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 there were preauthorized I just just 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 for to make as many trips as you're making when your school 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 if your school board and you are all agreeing then go ahead I probably would not be voting for him but I'm not on your school board no arm my the superintendent thank you obscenities thank you madam
Senator Tyler Dees
Unverified
14:06
chairir just that that was kind of my line of questioning just similar toenatorulllivan 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 of 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 your district well. I really do But I but I fear the 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 it hurts
what's going on in your school district if if these lights get shined on and it it looks like smoke right and I actually don't think there's fire there but I 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 what I'm saying at least today is is that you may want to check that policy so that you're not bringing it in a 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 In helping those students and into the the the the trips to go visit the students that have been in accidents I I believe you are operating in a good way but I 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 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 love thank you
Senator Fredrick J. Love
Unverified
16:08
madam chair and and 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 are we saying that as a committee I'm not gonna ask you any questions but are we saying that that we're finding the the travel and everything was school related because I think we had a categorized differently So our findings this
Speaker 19
16:43
I may be misunderstanding what you're asking but our findings are the same as it was last time we we
as audit we are questioning the practice there were 17 trips taken to the hospital to visit one student we we question that under law and
Senator Fredrick J. Love
Unverified
17:03
policy and so what was the word that we used I thought it was unrelated school travel
Speaker 19
17:11
we had in our finding it says legitimate school business purpose and then I may have said Yeah school business purpose
Senator Fredrick J. Love
Unverified
17:22
that's what I have written down unrelated so so actual actually the trips were relate to students that were in hospital yes the
Speaker 19
17:32
the trips were to children's hospital to for a student who was in the hospital. OK. all right well then
Senator Fredrick J. Love
Unverified
17:38
I I'll I'll just wave my I'll waive my questions thank you Representative mayberry thank you. I'm
Speaker 99
17:46
kind of the one that opened the can of worms. I'm sorry.
Representative Julie Mayberry
Unverified
17:55
the last meeting but it just kind of caught my eye because I 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 I 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 guard wheels 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 you know 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 if if we can and would look to audit to see what what maybe we can put in 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 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 we were was their family around or is this a student who
Speaker 31
19:26
perhaps didn't have family there a mother and a working father he had a senior still at my school that I took to see and and a couple of times I did I took the dad because he worked graveyard 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 you should not ignore that I live
almost in Texas and Louisiana and I feel like that if a bryant or an arkadelphia or a benton or a closer superintendent had gone every day it would not have it would not have raised th ing 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 us if a kid had gotten hurt at a school closer to
Representative Julie Mayberry
Unverified
20:30
LittleRock and you you 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
Speaker 31
20:41
is that is that corrected off graveyard and come to see his son but I I can't argue with those largely humanitarian was not aware that we axx humanitarian expenses like that I I know now Well I appreciate you for bringing
Representative Julie Mayberry
Unverified
20:56
this to light. we just want to make sure that there's
guardrails in place and and I appreciate the the the sentiment that you want to take care of your kids and you want to make sure that family gets up there
Senator Fredrick J. Love
Unverified
21:13
to to see him so thank you in love thank you so let let me ask you this do you have any relations to the child do not he's just one of my he's just one of my school kids and just the issues surrounding
the case is it is it were they injured on campus I mean I'm not
Speaker 117
21:31
asking you about the was he was on his way to school on
Speaker 31
21:40
on a Friday morning and then right here'll I'll also add this just so you know the clearer picture and maybe even have a better understanding what I'm about but after his three months at childrenld's his parents got him transferred to raig rehabilitation hospitalspital in Denver and on my own vacation time I've made3 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 and I was down 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 not sound an air of any fraudulent money scheming activity that's why ry to do alright I
Speaker 121
22:25
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 appreciate your heart I 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 me clarification because they've referenced the humanitarian portions of it and different so what are the laws and the policies that let you guys
to the different conclusions that you did here if you don't mind
Speaker 19
23:05
thank you madam chair 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 ACA617 to11 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 question 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 add
into that as I said being up in the northwest corner of the state we had a kid
very similar actually who'd 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 in wanting to go but not necessarily in using the district's funds to do that because they are specific funds and the nowland 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 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 very rarely very rare
Speaker 42
25:14
unless we stop at Georgetown like unless we put Georgetown on our list when we're with the the DC
Speaker 31
25:20
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 that
Speaker 60
25:44
range'm about to start my 9th year atal so have a keen survival rate there
Speaker 31
25:49
but of our kids that have been gone off to school since I've been there most of them end up with at a state university or most likely at trade school most often is there
but what what I want my students to understand is that they don't have to move away and make a new life in a new home somewhere but they need to know that they can if they want to and I don't know 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 they're
Speaker 117
26:41
are other places to be besidesal USA and do appreciate that 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 Ata is trying to do is making sure they're effectively being used and utilized to help these kids excel beyond that umpresentative Betty did you have a question
Representative Sonia Eubanks Barker
Unverified
27:18
you're recognized thank you madam chairir. I guess my question is more for 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 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 in the finance department that that followed followed that that
actually wrote that check and reimbursed the superintendent for for these expenses there we go OK sorry about that
Speaker 19
28:16
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 a basically a a general ledger out of scanN. 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 my follow up question is were
Representative Sonia Eubanks Barker
Unverified
28:46
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
Speaker 19
28:58
at all not not that we're aware of I tried to look through the school board minutes to see if there was anything in there concerning these and
Representative Sonia Eubanks Barker
Unverified
29:08
and I didn't see anything guess my point is it could still be constitutionally suspect but the violation of a district policy if the districts actually approving and paying these bills and and reviewing the process then they kind of
acknowledge that even though it's against district policy they approved that so I I think that would would I mean they're they're putting their stamp of approval on on that process so that would be my concern about the district policy version of this 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 file 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 the the school day or were these all after hours or or on the weekend or on your time away from the
Speaker 144
30:09
older brother I took him during the school day most of the
Speaker 31
30:13
time I work in the work in the cafeteria every day at lunch and so most of the time it was either between 1:30 or 2:30 when I would take off to LittleRock 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
Representative Sonia Eubanks Barker
Unverified
30:37
heard the the discussion about time away from the district and 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 your workwes much longer than40 hours if you're taking the time to do what you're doing with these students and so I 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 having you know graduated from a small North Louisiana high school that we we had the same type of leadership so so thank you yeah Louisiana and so I I just wanna I want to compliment you on that side and and and the fact that I think these were approved
Speaker 144
31:19
by the district that if I could answer your
Speaker 31
31:22
question too I I inherited a policy for my reimbursements or or practice I
should say and so the superintendent has to pass their request
Speaker 42
31:30
to the federal programs coordinator and the federal programs coordinator has to pass that approval to the district treasurer so there's like wo steps of approval before the check gets cut and then the board secretary signs
Speaker 31
31:42
off on I didn't want the picture that I just say hey y'all owe me this and I get the check that that's kind of the point I wanted
Representative Sonia Eubanks Barker
Unverified
31:51
to make for the committee is this was not something that you were doing there were multiple hands and players in this that were involved beyond just yourself thank you sir
Representative Julie Mayberry
Unverified
32:03
Representative mayberry you recognized Thank you. I'm just trying to see if I can ask again kind of legally and and how it works if a superintendent
were to come to littlettleRock because a student was receiving some type of athletic award is that a reimbursable expense so we would look at
Speaker 94
32:28
their policy and then we would look at Arkansas code Arkansas code
Representative Julie Mayberry
Unverified
32:33
describes it school functions as athletic or academic events OK, so if it if it was coming to the capital 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 the child went on to the
Speaker 24
33:22
rehab center what's the condition now? came back he just completed his junior year and now he is a he's one of my summer workers my summer workers and working
Representative Julie Mayberry
Unverified
33:33
hard probably working harder because he saw your heart and
Speaker 24
33:37
still has challenges to overcome I'll'll ask
Representative Julie Mayberry
Unverified
33:43
I just like to think about the message that we're sending and and maybe there's
Chair
Unverified
33:51
something that we can do to you know happen in our community when the and there 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 he that Doctor buye has put towards any kind of help that and his friends this was come from family with a lot of with a lot of money like most of our community does and
the actions that that he's shown that the ones that the are showing up in this in this report are specifically the reasons why we enjoy having him as our superintendent en ator Sullivan you recognized think guardrails are
Senator Dan Sullivan
Unverified
35:00
in place they just read the guard lit rails 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 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 guard rules that are in place and I think they ought to clearly shows we got outside the guardrails right OK, so we got outside the guard rails and the reason you're down here is to say you know 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 you know 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 we 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 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 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
Speaker 80
36:58
you make those types of approvals for the most part, I mean we we don't approve every travel item that's
Chair
Unverified
37:04
presented individually I mean you're on you've been on the board yourself I mean you
Speaker 50
37:12
if if you go through each item individually
Chair
Unverified
37:16
expenditure but it's like I said I mean the board was aware of these trips and Nobody on the board had a problem with them when the reimbursements were add it as one of the line items in our budget it might have been mentioned it might have been slightly discussed but
the budget for that month was approved yes. So
Speaker 54
37:49
these were I guess technically they were approved along
with everything else right seeing no other questions without objection Representativeong thank
Representative Wayne Long
Unverified
38:07
you madam chairman I was wondering this question for the school board president what's the school's
guidelines on a number of adults required for like overnight trips and that
Speaker 54
38:25
type of thing Personally I don't know that is there a policy as far
Speaker 60
38:31
as the number of adults don't know don't know if that
Speaker 32
38:34
we have one like when I do my DC trip I take 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 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 who we send.
Representative Wayne Long
Unverified
39:21
thank you because mainly I was wanting to make sure everybody was reputation was protected and you know of course by being over cautious you know of course that would be the the way to do that so in I'd suggest maybe the school look into establishing a policy so everybody kind of knows that you know whatever circumstance what they're expected to do and thank you for your answer. thank you thank you and 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 it's just trying to protect and you know oversee the taxpayers' dollars the students and and in the end of all you guys as well to make sure that we're all on the same page so seeing other questions without objection we'll file the report. thank you all
Speaker 19
40:23
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 a a 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 we have a motion
Speaker 64
40:50
from Senator Sullivan second from Senator
Deeses all in favor posts
Speaker 19
41:00
the next5 reports contain findings that were referred to the applicable prosecuting attorney and attorney general the first was clearendon school district on September 20,2023 the district discovered that employees payroll direct deposit totaling3100 dollars have 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 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 20,2024 the district discovered that an employee's payroll direct deposit totaling $1600 have 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 requests and the district was unable to recover the funds
after notifying law enforcement and the financial institutions finding two the district discovered and we verified unauthorized credit card charges totaling3,000 dollars 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 that objection we'll file the report
next report is Harrisburg school district on January82025 a vendor contacted the district about a payment of $1500 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 forharrisburg. So I'm gonna pause here for just
a second because as I'm sure many of you all have noticed
Speaker 89
43:30
oh I'm sorry senator Love go ahead you said 1500 and this is
Speaker 19
43:35
15,000 mistake568 right are you good but I'm sure
many of y'all have noticed the the number of these that have the funds that are diverted and could you talk a little bit about that to the members please so
Senator Fredrick J. Love
Unverified
43:58
if you've served on some of the other committees as
Speaker 19
44:01
well I know you've seen these a couple of 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 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 s cybersecurity risk you need to start ut in protocols or controls when
someone asks for their deposit information 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 $15,000.01 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've they you know 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 is a 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 that's a key component to that and then I will present next week at a 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 unauthor 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 it's a big issue and one
thing I was telling the chair about is I read a statistic that since the pandemic check frauds gone up385%. and so we're trying our best to to get the word out and to make are entities aware that we audit Representative painter you recognized thank you madam just a question for staff just
Representative Stetson Painter
Unverified
46:27
curious do we keep a track of how much taxpayer money we
lose whether it's an 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
Speaker 94
46:48
this we we have not in the past we have a couple
Speaker 19
46:53
of different things that we will track like the pa disposition report that goes to the full committee cybersecurity incidents I know we tracked those this is not something specifically that we track
but I could probably pull it for education institutions pretty quickly
Representative Stetson Painter
Unverified
47:09
if we could maybe at the end of the year just to see I 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 numbers And I appreciate staff doing that will work on that
Speaker 16
47:29
for the the audit cycle we just finished and I should be able to provide that for the education institutions thank you
thank you Senator Irvin thank you madam
Senator Missy Irvin
Unverified
47:41
chair and thank you for the report and yes I think I mean it was shocking you know that that meeting that we were in and all the money that's just being stolen from taxpayers in this form 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 like because we've got to stop the bleeding somehow some way so I think I think it's really important that we look at you know what
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.
Senator Fredrick J. Love
Unverified
49:24
just a suggestion you senator love you're recognized thank you and to the to staff how many of these findings were were committed after you issued
your memo. let me clarify we did not issue
a memo well how many how many 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 say what date is this June the 2024 if he issued his memo before that then that will let you know that we have a pervasive problem 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 listening if you could
Speaker 189
50:32
in that report very muchpresentative you recognized if you could in that report can
Representative Stetson Painter
Unverified
50:38
you put us the date 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
Senator Fredrick J. Love
Unverified
50:52
Yeah I think I think that I mean cause I think that's very important to know if people are really just ignoring these commissioner memos they're hearing to him I mean the the 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 with the commissioners put out And I think that's thank you ma'am chair thank youpresentative beatty you're recognized just want to add to this report or make the request
Representative Sonia Eubanks Barker
Unverified
51:24
that in addition to the data that the date of the item and the loss the date of discovery as well because I think that plays more in in line with what's going on and 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 of of the reporting is the timing of discovery that that that item was not a a proper item that was was diverted or 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 notified about any of this
Speaker 19
52:28
I wouldn't 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 if7 members plus a superintendent is getting that information they would be looking to make
Representative Wayne Long
Unverified
53:16
some changes so any other representative long you madam chairman the the because it was a gentry
school No I'm sorryharrisburg school on the check that was cashed inennessee do they have any
idea at what point the check was intercepted by this person it was I guess it wasn't an employee of the school so is it like intercepted in the mail or what do they
Speaker 19
53:45
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
54:06
report. and the next report was Highland School District the
Speaker 19
54:09
district use just under3800 dollars in general activity funds for staff meals without a documented business purpose in conflict with our Arkansas constitution as interpreted by the AG that concludes the findings for Highland school district I have a quick question on this
one so this is the issue with this was because it was for teacher appreciation
Speaker 19
54:38
week is this the is that So so no that that was their explanation for why they did the mills our issue with it is that there was no documented business agenda or business purpose for the mills so if they had
done this say in line with parent teacher conferences would
that be out of line or in bounds
Speaker 19
55:02
if they had documentation that they were conducting school business and and they chose to to provide meals most likely
Speaker 94
55:09
we wouldn't have an issue we would run it through our legal counsel though to to to
see right without objection we will file the
Senator Fredrick J. Love
Unverified
55:23
report. the final report which contained findings that were sent to theA in the AG is Pulassi County Special
Speaker 19
55:29
School District finding one an unauthorized
withdrawal totaling $2500 was made from a district account district personnel discovered the unauthorized withdrawal and funds were recovered from the bank Finding to in January of 2024 the district sent the wrong payroll file to the bank for distribution of funds to employee accounts and although the track transaction was re reversed on the same day the full amount could not be recalled due to insufficient funds and recipient accounts and specifically the district was unable to recover4600 dollars
that was inadvertently paid to former employees Finding3 the district received federal reimbursement of $80,750 from the emergency connectivity fund for expenditures that were already reimbursed by the AarP Esser fund and that concludes the findings for lay Countypecial school district right with objection we will
file the report The next two audit reports contain 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 the committee if they would defer the report to September
without objection we'll defer the report till the
Senator Fredrick J. Love
Unverified
57:15
next meeting. the next 13 reports contain findings that were that were not referred to the
Speaker 19
57:19
pa or the AG and they did not contain repeat findingstaff recommends that the committee take a moment to look these over and file en masse as reviewed
Senator Missy Irvin
Unverified
57:52
Senator Senator Irvin you're recognized thank you you had known you had mentioned something about positive pay I'm not familiar with this but this is a protection against these types of things, OK can we not just mandate by rule that any school school district that is with a bank that they enroll in this that mean I mean just I'm looking 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 fraud with that 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
h r ough legislative council or something to
Speaker 19
59:00
that manner Yeah I think it seems like we did something a couple of years ago where we submitted a recommendation might have been to insurance and banking maybe and our 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
Senator Missy Irvin
Unverified
59:27
made right well how long do you think it would take for you to get your report done on the the report that's been requested I'm
Speaker 178
59:38
not sure but I'll I'll get started on it
Senator Missy Irvin
Unverified
59:41
pretty quickly. I'll defer this recommendation till 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 through the for the department of education in all school districts Seems 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
because that I believe there is don't know what that cost is.
Speaker 94
1:00:27
that's something I'm sure we can it may be that some banks don't charge I do not know I should let me take
Speaker 19
1:00:36
back what I just said I'm not sure if they charge for that or not or if like 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? right then without objection we'll file the report.
Senator Fredrick J. Love
Unverified
1:00:58
The remaining48 reports that are listed on the last two pages re consists of audits with no reportable findings and staff recommends
Speaker 19
1:01:03
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 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'll give you just a second to look through that and then we'll go ahead and file them
Senator Fredrick J. Love
Unverified
1:01:34
senator love you recognized know that you just passed this item but I'm looking at page 12 of14 about the northwest Arkansas Service cooperative it says the cooperative has uninsured and uncollateralized bank deposits totaling382, I'm I'm trying to figure out how how would that be so they went
above the FDIC limit and didn't have enough pledge collateral at the bank
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 9
Representative Hope Duke Chair
Unverified
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 80
Speaker 99
Representative Julie Mayberry
Unverified
Speaker 117
Speaker 121
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