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Financial concerns for school system: Audit report questions funding
By TONY BRITT tbritt@lakecityreporter.com
A state audit of the Columbia County School system questions some of system's financial dealings during the 2001-02 school year.
The annual financial, operational and federal single audit reports the school system is operating with reduced amount of general fund revenues; questioned the amount of money used for a property purchase and suggested the school system pay back more than $200,000 in Public Education Capital Outlay (PECO) funds that may have been improperly spent.
Audit findings released last week listed the school system as experiencing a significant decline in its financial condition. The audit said the unreserved fund balance of the General Fund reserve decreased from $1,807,813 at June 30, 2001, to $951,665 at June 30, 2002.
In questioning the amount of money used to purchase property, one appraisal indicated the property was valued at $6,000 per acre, while the other appraisal valued the property at $7,000 per acre. The school board purchased the property at a cost of $587,875 which roughly costs $12,500 per acre.
The audit also recommends that more than $200,000 in funding used for landscape and irrigation work at Fort White High School be returned.Michael Flanagan, Columbia County superintendent of schools, said the declining amount of reserve funds also concerns school system officials.
"We've been concerned for two or three years about the declining amount of money in our contingency funds," Flanagan said. "We've had three or four very tough budget years and they don't seem to be getting easier. One of our school board objectives is to keep 3-5 percent in reserves, but because of the declines in funding from the state for students, that hasn't been possible."
A school system's general fund unreserved balance is used as a precautionary fund, to prevent school systems from getting into financial emergencies.
The report says the average level of General Fund unreserved for Florida School districts as a percent of revenues was more than 6 percent for the 2000-01 school year.
In the school system's response, officials indicated they also were concerned about the low unreserved fund balance and were developing a strategy to help alleviate the concern.
Despite education budget cuts across the state, David Martin, audit manager with the State Auditor General's office, which audits school districts, colleges and universities annually, said a reduction of unreserved general funding seldom happens to school districts to reduce funding so drastically.
"It's not a common trend across the school districts," he said, "but each year there are generally a few districts that experience a decline in their financial condition."
The report also cites where the school district purchased land for more than its appraised value.
It states the school board unanimously approved the purchase of 47.03 acres for more than the appraised value, which was $6,000 and $7,000 per acre.
The auditor's findings says the school board was not provided with copies of the appraisals or informed that the recommended purchase price was more than the average of the two appraisals received by the school district.
In October 2001, the school system approved the purchase of 47.03 acres adjacent to Columbia High School property at U.S. 441 and County Road 252 from Arky Rogers for $587,875. The land purchase was for future expansion at Columbia High School.
School board millage rate funds, which are earmarked for capital outlay projects and building new facilities, were used to purchase the property.
The auditor general's office recommended appraisal information be provided to the school board for its consideration before approving future acquisitions of real property, so the school board can be aware of variations between appraised values and recommended purchase prices.
Contrary to the report, Flanagan said school board members were aware of each step in the proceedings, including appraisals and getting prices with the seller board members could live with.
"In the future we will include the appraisal copies with the board member packets so that they did know what these appraisals were," he said. "We felt the appraisals came in rather low considering the prices for property that had sold in the area. We felt the amount paid was not that far out of line. The board members were kept informed at every step during the negotiations for our buying of the property." Flanagan said school system officials wanted to make sure the school board was apprised of what they were doing by their actions and they were paying an amount above the three appraisals the school system had gotten.
The report also found the school system spent $205,675 in PECO funds to pay for landscaping, including an irrigation system, at Fort White High School, which the auditor's reports say is not a state-defined project for PECO funding.
Flanagan said Florida Department of Education documents include money for landscaping and when bids for the Fort White High School project came in over budget, they used budget engineering and one area cut was the amount of money going toward landscaping.
"We had all along the intent to pay for that out of other construction money after the completion of the school and that's what happened," Flanagan said.
PECO funds are allocated from the state and school districts get the money on an annual basis. Money spent as part of the program must fall under state-defined project categories and appropriation amounts.
School systems officials have requested a clarification from the Department of Education for the expenditure and contend landscaping was originally included in Phase III PECO documents that the Department of Education approved.
Flanagan said the school system is using the money for special facility construction funds, as required.
"All school districts are required to have an annual audit of their financial statement as well as their federal grants," Martin said of the audit. "This audit satisfies both of those requirements."
Martin said the Auditor General's office is not an enforcement agency, and school districts don't have to comply with the suggested recommendations, but normally comply.
"District school boards, as a general rule, are very responsive to our recommendations," he said.
Martin said school officials conducted an exit interview where the audit's findings were discussed. School systems have 30 days to answer the findings. That information also is published as part of the audit report.
"Overall, this was one of our best audits," Flanagan said. "We already had a concern about our declining reserve contingency."
He said school officials are going to have to look seriously at cuts and whatever measures are needed for the next school year and the costs associated with the class-size reduction and pre-kindergarten amendments will increase the problem.
The annual financial, operational and federal single audit reports the school system is operating with reduced amount of general fund revenues; questioned the amount of money used for a property purchase and suggested the school system pay back more than $200,000 in Public Education Capital Outlay (PECO) funds that may have been improperly spent.
Audit findings released last week listed the school system as experiencing a significant decline in its financial condition. The audit said the unreserved fund balance of the General Fund reserve decreased from $1,807,813 at June 30, 2001, to $951,665 at June 30, 2002.
In questioning the amount of money used to purchase property, one appraisal indicated the property was valued at $6,000 per acre, while the other appraisal valued the property at $7,000 per acre. The school board purchased the property at a cost of $587,875 which roughly costs $12,500 per acre.
The audit also recommends that more than $200,000 in funding used for landscape and irrigation work at Fort White High School be returned.Michael Flanagan, Columbia County superintendent of schools, said the declining amount of reserve funds also concerns school system officials.
"We've been concerned for two or three years about the declining amount of money in our contingency funds," Flanagan said. "We've had three or four very tough budget years and they don't seem to be getting easier. One of our school board objectives is to keep 3-5 percent in reserves, but because of the declines in funding from the state for students, that hasn't been possible."
A school system's general fund unreserved balance is used as a precautionary fund, to prevent school systems from getting into financial emergencies.
The report says the average level of General Fund unreserved for Florida School districts as a percent of revenues was more than 6 percent for the 2000-01 school year.
In the school system's response, officials indicated they also were concerned about the low unreserved fund balance and were developing a strategy to help alleviate the concern.
Despite education budget cuts across the state, David Martin, audit manager with the State Auditor General's office, which audits school districts, colleges and universities annually, said a reduction of unreserved general funding seldom happens to school districts to reduce funding so drastically.
"It's not a common trend across the school districts," he said, "but each year there are generally a few districts that experience a decline in their financial condition."
The report also cites where the school district purchased land for more than its appraised value.
It states the school board unanimously approved the purchase of 47.03 acres for more than the appraised value, which was $6,000 and $7,000 per acre.
The auditor's findings says the school board was not provided with copies of the appraisals or informed that the recommended purchase price was more than the average of the two appraisals received by the school district.
In October 2001, the school system approved the purchase of 47.03 acres adjacent to Columbia High School property at U.S. 441 and County Road 252 from Arky Rogers for $587,875. The land purchase was for future expansion at Columbia High School.
School board millage rate funds, which are earmarked for capital outlay projects and building new facilities, were used to purchase the property.
The auditor general's office recommended appraisal information be provided to the school board for its consideration before approving future acquisitions of real property, so the school board can be aware of variations between appraised values and recommended purchase prices.
Contrary to the report, Flanagan said school board members were aware of each step in the proceedings, including appraisals and getting prices with the seller board members could live with.
"In the future we will include the appraisal copies with the board member packets so that they did know what these appraisals were," he said. "We felt the appraisals came in rather low considering the prices for property that had sold in the area. We felt the amount paid was not that far out of line. The board members were kept informed at every step during the negotiations for our buying of the property." Flanagan said school system officials wanted to make sure the school board was apprised of what they were doing by their actions and they were paying an amount above the three appraisals the school system had gotten.
The report also found the school system spent $205,675 in PECO funds to pay for landscaping, including an irrigation system, at Fort White High School, which the auditor's reports say is not a state-defined project for PECO funding.
Flanagan said Florida Department of Education documents include money for landscaping and when bids for the Fort White High School project came in over budget, they used budget engineering and one area cut was the amount of money going toward landscaping.
"We had all along the intent to pay for that out of other construction money after the completion of the school and that's what happened," Flanagan said.
PECO funds are allocated from the state and school districts get the money on an annual basis. Money spent as part of the program must fall under state-defined project categories and appropriation amounts.
School systems officials have requested a clarification from the Department of Education for the expenditure and contend landscaping was originally included in Phase III PECO documents that the Department of Education approved.
Flanagan said the school system is using the money for special facility construction funds, as required.
"All school districts are required to have an annual audit of their financial statement as well as their federal grants," Martin said of the audit. "This audit satisfies both of those requirements."
Martin said the Auditor General's office is not an enforcement agency, and school districts don't have to comply with the suggested recommendations, but normally comply.
"District school boards, as a general rule, are very responsive to our recommendations," he said.
Martin said school officials conducted an exit interview where the audit's findings were discussed. School systems have 30 days to answer the findings. That information also is published as part of the audit report.
"Overall, this was one of our best audits," Flanagan said. "We already had a concern about our declining reserve contingency."
He said school officials are going to have to look seriously at cuts and whatever measures are needed for the next school year and the costs associated with the class-size reduction and pre-kindergarten amendments will increase the problem.
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