Earle School District sets goals for clean audits

Earle School District sets goals for clean audits

State- appointed superintendent says effort part of long- term plan to return district to local control

news@theeveningtimes Earle School District has set a goal to have two years of clean audits with no substantial findings, adjusted staffing levels to meet declining enrollment, and to have $650,000 in its ending balance as it strives to get out from under state control.

State appointed Superintendent Dr. Richard Wilde presented a copy of the district’s quarterly report to the City Council and highlighted some of the areas they will be working on in the next couple of years.

“This will be an ongoing discussion throughout the year,” Wilde said. “But there are three goals outlined for the district to be returned back to local control.”

The report was filed with the Arkansas Department of Education and will be discussed in Little Rock by the State Board of Education who is keeping close tabs on Earle.

The school district was taken over by the state in November 2017 and the five member school board dissolved after it was discovered that the school district spent nearly $1 million of federal Title 1 and school lunch funds on unallowable expenses.

The school district was required to pay back $300,000 of the Title 1 funds and had to borrow the money.

Wilder said the first goal is to get the school district back on solid financial footing.

“The school district should have $650,000 in its ending fund balance or the equivalent of three to four months operating expenses,” Wilde said.

Last year, the district finished the year with an ending balance of about $235,000.

Wilde said that creates a cash flow problem because although they receive $6 million in state aid, the money is spread out over 12 months. It is important to have about $600,000 in the ending balance because the district makes most of its purchases at the beginning of the school year.

“Gradually you will build that up through the year,” Wilde said. “But it takes time to build that up. So it creates an issue with how do you make your purchases and still pay all of your bills.”

Administrators are also working to have clean audits.

Auditors found that the school district was left with a nearly $230,000 deficit in 2017. The report also faulted the school district for not maintaining proper supporting documents for all transactions, lack of controls over credit card use, discrepancies between employee salaries and what they were actually paid, and that financial records had not been properly maintained and that internal controls did not detect accounting errors.

“We had an audit last year that had substantial findings,” Wilde said. “So one of our goals is to have two consecutive years without substantial findings.”

One of the new steps they are implementing is to keep the district’s federal and restricted funding separate from general operating funds.

Lastly, Wilde said the district is working to develop a three year fiscal plan that will identify staffing levels and account for declining enrollments.

“We will be looking ahead and saying based on our enrollment trend, what will be the staffing we would have, and what would be the budget we need to have for that,” Wilde said.

Wilde said the plan includes

putting aside money

for preventative maintenance on the district’s buildings, and putting money into a building fund over the next 20 years to plan for the eventual need to renovate the school.

“If you don’t start putting money away early you bear the brunt of any renovation, and typically that results in an increase in the millage or some other mechanism by which you will fund it,” Wilde said.

By Mark Randall