District gets dis­tress tag.

Board vote puts school sys­tem in dan­ger of state takeover

Arkansas Democrat-Gazette - - ARKANSAS INSIDE - CYN­THIA HOWELL

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.

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