Below is a story written by Mary Hinds of the News
Herald on a topic I brought up at the last board of education workshop.
Ms. Hinds did an excellent job with the story but I would like to add a
few more details that she may not have known.
Unknown by I think most people, each year the BOE distributes a
substantial amount of money to each of the nine schools. This money is
spent at the discretion of the principals on a wide variety things. Last
year the BOE distributed nearly $714,000.00 to the nine schools. This
years distribution is nearly $600,000.00. Each school's share of the
money is determined by the number of students, teachers and other
factors. Some refer to this as their "bag of money."
This practice has been going on for many years but according to the
State Comptroller's office, the practice is a violation of the law.
Given that it is illegal, I have asked that the practice be suspended
immediately.
School audit sparks questions
Author: Mary E. Hinds
Source: News-Herald
The county schools’ activity funds and how they are
viewed by state auditors came up for discussion at the last school board
workshop. Board member Van Shaver said a yearly finding by state
auditors is a “major problem.”
For decades the county schools have operated by disbursing funds to the
individual schools and allowing them to make the purchases they need.
Shaver said giving the funds directly to the schools is “illegal” and
“every year we are written up by the auditor for it.”
According to the county audit released by the state, Loudon County
School System “disbursed fund to the various individual schools’
activity accounts and allowed the individual schools to make purchases
of equipment and various other items.” The finding also says this
practice “violates provisions of the County Purchasing Law of 1957,
Section 5-14-101, Tennessee Code Annotated (TCA). This act requires the
county purchasing agent to make all purchases for the various county
departments.”
The audit recommends, as it does each year, that the “school department
should not disburse funds to individual schools for the purchase of
equipment and various other items. All purchases should be made by the
purchasing agent in compliance with the County Purchasing Law of 1957.
School activity funds should not be used to disburse county school
funds.”
The audit includes the management’s response from the office of the
director of schools (who was Edward Headlee at that time) which states,
in part, “Each year we allocate funds to schools based on a per student
allocation for such items as library books and materials, instructional
materials and supplies, per teacher allocation, telephone, duty-free
lunch, staff development and data entry services. These funds were
distributed to each school during the school year and were audited by a
firm selected by the Loudon County Board of Education for that purpose.
This firm verifies that those funds were properly expended and
accounted.”
The management response concludes, “We feel strongly that the site-based
management in which the principal is held accountable for all activities
in the school is a more efficient use of funds. For this process to be
conducted for all nine schools centrally we would need to employ an
additional person to handle this paperwork. To centralize the purchasing
of all school supplies and materials would seriously affect the
efficiency and quality of the process.”
The state rebuttal to the management response pointed out, “this method
of channeling funds to the individual schools violates state statutes.”
Referencing this finding in the audit, Shaver said he believed
“purchasing not done through the purchasing department is illegal. I
don’t know how we can continue to do that.” He also said he found it
irregular that each individual county school pays for its own
communication charges. Bennie Sims, budget director of the school
system, reminded Shaver that each school has a switchboard and its own
phone system.
Director of Loudon County Schools Wayne Honeycutt said the county
schools use a “site based management” system, which allows the schools
to “operate independently” and, while the practice has never been
approved by state auditors, he was “not sure it’s illegal.” Board member
Gary Ubben agreed site based management is a “common practice in much of
the state.”
Board member Steve Harrelson suggested Honeycutt contact the Tennessee
School Board Association (TSBA) legal department, which advises local
school boards, for an opinion on the situation. Honeycutt said he would
follow up on the request for a legal opinion.
Speaking after the meeting, Shaver said using the term “illegal” to
describe the distribution of funds to the individual schools might be
overstating the situation a bit, but he was not sure how violating the
statute differs from being illegal. He said he did not think any school
personnel were abusing the system, but having no central accounting
could leave the system open to abuse and is certainly frowned upon by
state auditors.
State auditor Dennis Dycus, speaking about the school system’s audit for
the 2007-2008 school year, said the state comptroller’s office had
“rendered an adverse opinion” on the school system’s method of
distributing funds and the records in some Loudon County schools were
“so bad that they (state auditors) could not satisfy themselves as to
whether everything was properly accounted for or not. As an auditor,
which is what I am, that really concerns me.” |