By JOHN HOFHEMIER
Leader senior staff writer
Three new Jacksonville schools and the rest of the proposed $104 million Pulaski County Special School District construction are threatened by the sudden and unexpected notice from the state Board of Education on Wednesday that the district may be back in fiscal distress.
PCSSD officials say they are confident that they will be successful in their appeal of the finding, which is based largely on problems and deficiencies identified by a state Legislative Audit last year and since corrected by Superintendent Charles Hopson, the board, led by president Bill Vazquez, and chief financial officer Anita Farver.
At a special PCSSD board meeting Thursday evening, the board took action to resolve the few remaining issues and money owed the district, in hopes of defending against the fiscal- distress finding.
“We don’t want to threaten a $100 million building program over $30,000 worth of concerns and discrepancies,” Vasquez said. He said that amounted to less than one-one thousandth of 1 percent of the district’s budget.
FISCALLY SOLVENT
“This is unexpected. We’ve been forthright and diligent,” Vasquez said in opening Thursday night’s special board meeting. “We have all the minimal amounts in our accounts, we are fiscally solvent and we anticipate adding to those accounts by the end of the year.”
He said the state’s concern was based strictly on a few items left unresolved from the Legislative Audit.
“But to move forward, to upgrade, we have to take care of these items and let the state Department of Education see that we are exercising our fiduciary responsibility to the taxpayers,” Vasquez said.
The district was in fiscal distress from 2005 through 2007 because it was essentially broke, he said. This time around, the district is on sound financial ground, he said. The problems here are those identified by an audit requested by Tim Clark, then the school board president, over concerns that the district wasn’t following sound procedures in tracking its money.
AUDIT FINDINGS
The state Legislative Audit Bureau discovered about $435,000 in theft from a maintenance supervisor—currently in prison—and another $400,000 in expenditures that were improper or improperly documented. It also found fault with the district’s financial practices, and since that time, the board has implemented numerous and sweeping changes.
By December, the amount of questionable expenditures had been reduced to about $60,000. By mid-March, all but about $30,000 of those expenses had been either documented, repaid or in some cases, legal action had been undertaken to recover money.
At Thursday’s special meeting, the board voted to have the DREAM preschool program, which owes the district about $21,700, continue making payments as per the consent judgment.
The mechanism for paying the superintendent’s health insurance was changed to comply with state statutes, and board member Gwen Williams told the board she had agreed to a schedule of repayment for $1,223 in unallowable or improper payments she had received.
Board member Mildred Tatum announced that she had repaid the $116 she was found to owe the district.
The legislative audit was also concerned because the district hadn’t been reimbursed $3,422 from the Confucius Institute for traveling to China to help set up a Mandarin Chinese language program in the district.
“The check arrived yesterday,” Farver said.
NO NEW DEBT
The district is expected to approve its 2011-2012 budget April 12, including $8 million in cuts aimed at debt service on a $104 million construction bond issue, but until the matter of fiscal distress is resolved, the district may not “incur any debt without prior written approval from the Department,” according to the letter from Hazel Burnett, state Education Department coordinator for fiscal-distress accountability and reporting.
Both the district’s appeal of the fiscal-distress finding and its request for authorization to sell the bonds could be heard at the May state board meeting, according to Hopson.
PCSSD Director of Operations Derek Scott, who is the ramrod on the construction initiative, said Tuesday and reiterated Friday that the district’s request for authority to sell the bonds had been bumped already to the state board’s June meeting, so if it upholds the district’s fiscal-distress appeal in May, no time will have been lost in proceeding with the program.
Scott said he still hoped the PCSSD board would approve the budget, including $8 million in cuts, April 12; if the state board agrees in May that the district is not in fiscal distress, then in June to sell the bonds, let the construction bids and fire up the bulldozers in June or July.
CLEAN CREDIT REPORT
Of the relationship between the building program and fiscal-distress finding, Scott makes this analogy: “It’s like we are trying to buy a house and first we are trying to get the credit report clean.”
Hopson said Thursday that he was not inclined to put the bond-issue question on the table at the same state board meeting that the district was appealing the fiscal-distress finding.
