District gets distress tag.
Board vote puts school system in danger of state takeover
The state Board of Education on Thursday voted to classify the Earle School District as being in fiscal distress, a status that puts the 572-student district in jeopardy of state takeover.
State Department of Education staff recommended the classification to the Education Board based on recent findings of inadequate documentation on how federal child nutrition and Title I funds were spent, lack of controls over district credit-card use, failure to obtain bids for expenditures exceeding $10,000 and discrepancies between contracted salaries and actual paid salaries.
The district will have to return to the federal government at least $300,299.97 received in the 2015-16 school year that was spent on unallowable expenses or for which there was inadequate documentation to show how it was spent, state finance officers said.
The district’s 2016-17 allotment of Title I money, $303,436.85, will also have to be repaid if the district can’t redirect its use to allowable expenses by Sept. 30 of 2018. Title 1 money must be used to supplement instructional programs and can’t be used for required services.
Also in question and still being evaluated is how the district used National School Lunch aid, which is awarded to districts based on their percentage of students who qualify for subsidized school meals and is restricted for use in enhancing education programs for students. The district had potential unallowable National School Lunch aid expenditures of $555,128 in 2015-16 and $717,429 in 2016-17.
Other issues are an employee contract that can’t be tied to a W-2 income tax report and W-2 income tax reports for people who don’t appear to have employee contracts, according to a summary of the district concerns presented to the state Education Board.
Greg Rogers, the department’s assistant commissioner for fiscal and administrative services, and Cynthia Smith, the department’s coordinator of fiscal services and support, told the Education Board that they are continuing to review the district’s financial transactions and practices and will submit a final report to Education Commissioner Johnny Key by the end of the month.
Key has the authority to take further action against the district, up to assuming control of the system by dismissing the superintendent and/or the elected school board.
As for now, the Earle district must seek state approval of all of its expenditures. It is also obligated to develop and carry out a financial improvement plan.
The Earle district did not contest the fiscal-distress label. Superintendent Rickey Nicks said his district was unaware of the unallowable expenditures of federal grant money until the completion of an audit earlier this year. He said the district is working with the state to correct the problems.
Earle is one of two districts now classified as being in fiscal distress, the other being the Dollarway School District. Dollarway is operating under state control with a state-appointed superintendent and no elected school board.