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Examples of creative school accounting?

By Gerald H. Totten
Posted Friday, July 25, 2008

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Pittsboro, NC - The following comments and questions apply to the information provided on the Chatham schools’ Capital Outlay Budget purporting to show completed and work in progress items dated 6/4/08 and the 7/15/08 request of the commissioners to reprogram budget leftover funds on 21 July 2008.

The first question surrounds the Northwood bleachers project. On the internal spreadsheet $298,000 is shown as the budgeted cost, $221,887 actual cost and a “surplus” of $76,113 as of 6/04/08. The spreadsheet dated 15 July 2008 submitted to the commissioners asking for reprogramming of some $38,785.35 left over from various projects directly to the Northwood bleacher project was approved on 21 July 2008.

How can we go from a surplus on that project of over $76K to an additional need of almost $39K? How much, if anything was added that we do not know about? What did it go to pay for? What this looks like is a shuffling of what were unneeded funds on 6/4/08 to an additional $114,898.35 which the board has not approved and apparently “needed” on 15 July 2008. Who has the sole authority to approve such creative work in expenditures and changes without putting it before the Board of Education? Our very loosely worded budget amendment is part of it but, even then, a prudent manager would make certain the board did not have to examine every document that is produced for clarity and reason.

That fast shuffle came as a big surprise to me as it was discussed with the commissioners and I am supposed to be the liaison between the two boards. It is difficult to carry out those duties to the two boards when such as this takes place without any explanation whatsoever.

Other questions raised by review of those school produced documents are:

1. Where is the $40,000 coming from to redo a classroom at Northwood into a science lab.

2. How could we miss the Northwood budgeted parking project by $118,110? The budgeted amount is $155,000 and the document shows a contract price of $36,890.

3. Notice the total capital outlay budget total of $719,106. Notice also the alleged positive savings of $243,281.44 of completed and work in progress. Our school budgeting process is way out of whack and is therefore unreliable when we miss by over one third! Perhaps the schools need to create a budgeting committee comprised of outsiders to review our needs versus projections so we could get into a tolerable range.

4. In total capital outlay we budgeted for $1.9 millions and had over 16% left over. Again, the difference is too great to simply be chalked off to a new accounting program or other creativity. As a business manager, it simply throws into question our ability to manage projects to my mind.

5. Fund balance carryover shows a soil/wetland study at New School. Why did we pay for that?

6. The board approved three running track expenditures of $75,000 each. Lottery proceeds of $305,651 were used to allegedly pay for those tracks. How can an overage of $54,179 simply be incurred over vendor or contractor quotations or was the original figure simply a guess to put before the board then the final cost was taken from some other project? I recall the discussion of the fact the tracks were in worse shape than we originally thought but was the overage ever discussed and pointed out? What other projects were delayed or refused?

7. The county received information we needed $36,000 for HVAC improvements at three schools. That amount was granted from lottery proceeds as requested yet somehow the $12,000 allocated for Northwood has now been shifted to be paid out of other maintenance funds. What maintenance project will have to be put off by the change in funding and why was the change done in the first place? Also shifted from the granted and allocated lottery funds were restroom renovations at J.S. Waters and Jordan Matthews to the tune of $33,088.49. Still to be completed is a $5,000 tab for Sage’s voice mail. I find no budget carryover for that expense yet we received the money allocated for that expense as we requested.

8. In 2007, $75,000 from lottery funds allegedly were paid for a telephone system at North Chatham. Now we have added $1,582.55 so North Chatham has telephone/intercom. It seems incredulous to me that we pay such a high amount for a telephone system then have to add a patch or band aid so it works the desired way!

9. Finally, I have attempted for several days, making the request as a known board member, to receive a lottery proceeds accounting from our school’s finance office. Five days after the request I am informed after my third request it will be released by the superintendent on 28 July. Readers will recall this screening and sole source management is what created mnay comments on the recently created questionairres completed by staff and others when we sought information about what was desired in a new superintendent. Public information should be readily available without some sort of screening process. On the same day requested, the County’s Finance Officer provided the information to me without any cumbersome process.

The disparities between the two sets of numbers shown must be explained by the Chatham County Schools forthwith! The County receives the lottery funds and passes them through to the schools as they need them. The County Finance Officer’s records show that in Fiscal 2007 $387,250 was paid to the schools and in Fiscal 2008, another $305,651 was paid over to the schools. For the two year period, Chatham County Schools received $692,901 yet the schools’ spreadsheet entitled 2007-2008 Capital Outlay Budget shows lottery proceeds of $472,844.59. That $220,056.41 difference must be explained as to where the money was actually diverted and by whose authority.

I make no allegation of wrongdoing or misappropriation but the accounting for public funds as pointed out by comparing just two documents produced by the same department raises enough questions to be serious blunders by me as an elected board member charged with oversight of the system and others within the school system. Maybe they can be logically explained – and I hope they can be – but certainly something is very wrong when one set of figures won’t match the other set purportedly covering the same events.

Our food service deficits from last year also bear closer scrutiny to my mind. The figures as to the amount of the shortages went from around $200K last year to over $600K then settled around $500K. They have never really been satisfactorily explained but when one food service manager abruptly resigned when the shortage was first identified then another resigns with less than two weeks on the job, I smell something that is not quite cricket as the British say.

We probably are way overdue for an investigation by the State Bureau of Investigation to put these matters to rest and start with a clean slate, putting round pegs in round holes and square ones in square holes. I don’t believe we are doing that now.

Gerald H. Totten
Colonel, United States Marine Corps (Retired)
Member, Chatham County Board of Education

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