The numbers just don’t add up. One of our regular contributors has spent more time delving into the DeKalb School District’s projected budgets vs actual budgets and the resulting strange, incongruent reports provided by our current leadership, Superintendent Michael Thurmond and CFO Mr. Bell presented to our board simplistically resulting in practically zero questions.
Each year, the DeKalb County School District’s Board of Education approves a one page document as the budget for the next fiscal year. The FY 2014 budget anticipated $1,023,413,706 in total revenues. The GaDOE reports total revenues for DCSD in FY 2014 were $900,819,910.
The difference between the predicted revenue and actual revenue was $122,593,796 less actual revenue or [12%].
It is amazing that the school district can miss its revenue projection by $122+ million dollars and still put increase its fund balance by approximately $30 million. That is a $152+ million decrease in funds available to run the school district.
This raises questions regarding the competence of the people doing the forecasting.
Was the BOE told of the shortfall in revenue? No.
Revenues are only half of the budget. Expenditures are the other half. The BOE approved total expenditures of $986,474,874 for FY ‘14. However, the GaDOE reports DCSD expenditures of $842,266,250. The difference being $144,208,624, or 14.6%. $144+ million not spent in classrooms.
Was the BOE given any explanation for this reduction in expenditures? No.
These findings raise serious questions regarding the accuracy of what the BOE is told during the monthly financial report.
What is even more disturbing is the fact the BOE didn’t pick up on the differences.
SACS says boards of education have two responsibilities; fiduciary and governance. The DCSD BOE failed to exercise its fiduciary responsibilities. In fact, the BOE continues to approve, without questions, the seemingly inexplicable spending by the administration.
The accrual basis of accounting means that revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. DeKalb County Schools uses what is called “modified accrual basis of accounting.” When you look at the most recent vendor spends report you see DCSD’s modification is expenses are neither recorded, nor reported, when invoices are received. There are five invoices from Alexander and Associates dated Feb. 24, 2014, which were not entered into the accounts payable system until July 17, 2014. Invoice number 696304 from Sutherland Asbill Brennan LLP is dated November 19, 2013, but was not entered until July 24, 2014. This is not the accrual basis of accounting.
The school district audits done annually by the GaDoe are only process audits. According to bizmanualz.com, “a process audit is focused on determining process effectiveness and the ability to achieve planned results.” These audits do not look at the accuracy of the financial reports of school districts.
The school district has never done a full forensic audit. Never. One was partially done by Ernst & Young back in 2004, and promptly buried by then superintendent, Crawford Lewis – as it showed significant over payments to many administrators at the time – including our current board Chair Melvin Johnson, who was said to have been paid approximately $11,000 more than comparable positions in area school districts.
DSW bloggers have long believed the DeKalb County School District needs to have a full, financial audit done which includes all accounts, and funds, for fiscal years 2013 and 2014 [as was promised by Ramona Tyson in 2010 and never produced]. The results of that audit need to be made public. The finance department and the communications department then need to develop a plan to communicate the budget to the BOE, and public, in a way that reflects all accounts and funds on a monthly basis. The taxpayers of DeKalb County have no faith in the school district’s administration and these steps will go a long way towards restoring trust.
Please contact your BOE representative and ask them to request a full forensic financial audit for FY ‘13 & ‘14. Also, ask them if they were aware of these deviations from the budget. If the answer is “no,” ask them why not.