By JOHN HOFHEIMER
Leader senior staff writer
Only about 58 percent of $105.6 million in desegregation funds provided by the state to the Pulaski County Special School District since 2006 was apparently used for desegregation-related expenses, according to an audit report commissioned by the state Attorney General’s Office and released Thursday.
Superintendent Charles Hopson and the district’s attorney, Sam Jones, said Thursday that the three districts party to the desegregation agreement have never been required to use those funds specifically for desegregation-related purposes.
The timing could hardly be worse for the district, which is trying to escape a fiscal-distress finding by the state and thus begin an ambitious school-building program.
Jones said he didn’t know what, if any, effect the Navigant audit would have on the district’s attempt to be declared unitary by Federal District Judge Brian Miller, or in the state’s determination of whether or not the district is in fiscal distress.
The auditor, Navigant, found North Little Rock School District’s books in such bad shape that they couldn’t track which, if any, monies were dedicated to desegregation, according to the report, and a similar report on the Little Rock School District is not yet completed, they said.
RECORDING IMPROVED
Navigant’s analysis revealed that the PCSSD’s recording of the
receipt of the funding improved over time. For example, for 2010, 100 percent of the desegregation funding received by PCSSD was recorded with the appropriate desegregation codes, which was in contrast to 2006 where the entire funding received by PCSSD was improperly recorded…with an unrestricted general-operating-fund code.
Attorney General Dustin McDaniel hired Navigant to review the districts’ desegregation spending in order to provide transparency and more accountability in the use of the funds. In addition, McDaniel said he hopes the districts use Navigant’s reports to ensure that they are achieving and maintaining unitary status and to prepare a “wind-down” plan for when the desegregation funding eventually ceases.
NAVIGANT FINDINGS
Navigant found that the North Little Rock School District and Pulaski County Special School District received millions of dollars in desegregation funding that they have used for other purposes over the past five years.
“Of $105.6 million in desegregation funds received by the Pulaski County Special School District since 2006, Navigant found that only $61.5 million, or about 58 percent, has been recorded as spent on desegregation purposes,” according to McDaniels.
About $35 million during that time was transferred to non-desegregation, general, unrestricted accounts, according to Navigant, so “it is unclear as to whether these funds were expended for desegregation purposes.”
Neither does the state Department of Education track these monies, according to the report.
“The North Little Rock School District has received $45.1 million over the same time period,” according to McDaniels. The Navigant report said it “is largely impossible to determine what portion of the [North Little Rock] Desegregation Funding, if any, was actually used for desegregation related purposes.”
The state provides about $70 million annually to the three Pulaski County school districts to satisfy court orders that were designed to assist in desegregation efforts. To date, the state has provided more than $1 billion in desegregation payments to the three districts.
“Until now, there has been no clear-cut accounting of how the school districts spend these tax dollars,” McDaniel said.
FISCAL DISTRESS
Both PCSSD and North Little Rock School District are facing fiscal-distress findings from the state Education Department and the secretary of state said he believed the reports should be available as state education officials review the districts’ fiscal status.
Navigant said the districts’ policies and procedures may have allowed fraud, waste, mismanagement or abuse of funding.
Many of its concerns were identified last fall by the state Legislative Audit and have been addressed by the PCSSD board and administration, according to PCSSD communications director Deborah Roush.
“There appears to be poor tone at the top and a high degree of nepotism demonstrated by the superintendent, board members and senior level employees, particularly in the hiring of consultants,” according to Navigant. Hopson’s brother is an assistant principal.
RECOMMENDATIONS
The report made several recommended separating reporting of desegregation funding, training employees on proper use of desegregation funding, retaining an independent monitor, conducting annual desegregation funding audits, implementing policies and procedures, establishing a good control environment at the top, totating the financial-statement auditor every five years.
The PCSSD board will meet Tuesday to discuss the Navigant findings, according to Roush.
