IN SHORT: Troubled school district takes steps in reaction to “early indicators” of fiscal distress.
By John Hofheimer
Leader senior staff writer
The discovery earlier this year by the state Bureau of Legislative Audit of unauthorized purchases and sales of about $439,000 of school property, improper reimbursements of some school board members, overpayment of former Supt. James Sharpe and poor oversight of other financial matters has prompted the state Board of Education to “pre-warn” the Pulaski County Special School District that it could be headed again for fiscal distress.
The state is required to warn every district by Aug. 31 if it has found “early indicators of fiscal distress.”
The specific indicators for PCSSD were: State or federal audit exceptions or violations and failure to comply with state law governing purchasing or bid requirements. The district has already taken action on several problems.
“I learned about the early indicators of fiscal distress last week at…a meeting with Bill Golf, assistant (Arkansas Education Department) commissioner for finance,” the district’s chief financial officer said Friday.
“The early indicators of fiscal distress mirror the issues listed in the legislative audit report,” said Anita Farver, the PCSSD chief financial officer.
“In my opinion, we just need to comply with district, state and federal policies at all times, with all fund sources, on all expenditures without deviation.
“Tracking expenditures was an issue,” Farver said. “This issue is being corrected with our financial data base being moved to the state server. All expenditures are now processed through the Arkansas Public School Computer Network.”
The state Education Depart-ment put PCSSD in fiscal distress in 2005, from which the district emerged in 2007 after careful oversight by the state.
At that time, the district’s reserves had run unacceptably low.
This time, the district is being warned that it has not been sufficiently careful with its money.
The state legislative audit found that about $430,000 worth of district equipment was ordered, then sold by its mechanical systems supervisor, James Diemer, who subsequently pleaded guilty to theft of property.
In addition, school board members Mildred Tatum and Gwen Williams and former school board member Pam Roberts were found to have billed the district for reimbursement for non-reimbursable items, such as theater tickets.
Tatum over-billed the district by $2,788, Williams by $619 and Roberts by $270.
As recently as the Sept. 14 meeting, the board was considering taking action on measures intended to further tighten its own financial oversight, things which Farver says will not only help satisfy the Legislative Audit Bureau, but also the concerns of the Education Department.
The board unanimously approved revisions of the district’s business-procedure manual regarding out-of-district travel, local travel reimbursement and perhaps most importantly, prohibiting blanket purchase orders.
Instead, every purchase order will be submitted and approved individually, Farver said. A blanket order was defined as “written authorization in the form of a purchase order for a department or departments to purchase indefinite quantities of goods and or services from a specific vendor for a specified period of time, usually one year.”
The board is also considering an agreement with U.S. Bank for “procurement cards.”
The proposal, by Farver, would automate the procurement process to reduce unauthorized spending, slash administrative costs and enable the district to better manage purchasing by analyzing spending patterns.
They would be issued at the cabinet level during the first year of implementation to be used for approved purchases.
The board also voted to discontinue the practice of cash advances for out-of-district travel for board members to insure accountability.
