terminally dysfunctionally insane Florida Keys school district in crying need of state take-over
Sunday, March 10th, 2013
As good as any likeness of the Florida Keys school district
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From the local blackboard jungle part of yesterday’s rumbling, setting up today’s blackboard jungle rumbling, which follows:
redundant eye-scalding Florida Keys blackboard jungle financial SNAFUS and hurricane evacuation schecule (aka let’s pave over more of the Keys) propaganda
eye-scalding truth that the Asteroid Belt’s school district should be taken over by the Florida Board of Education, which intervention I was the only candidate in last year’s school board races to advocate.
googled pic, not in The Key West Citizen article
State audit of schools analyzed
Retired banker: Auditor General’s report reflects ‘system in shambles’
BY TERRY SCHMIDA Citizen Staff
What a mess.
Amen
That’s the unofficial verdict of Nancy S. Beckwith, a retired commercial and government banker, on the Florida Auditor General’s recently released preliminary 2012 audit of the Monroe County School District.
The audit lists 18 “findings” — five involving funding from the federal government — that require district action. Six of those findings have been cited for at least three years.
Beckwith said the report “reflects a system in shambles,” leading her to “wonder how this public entity is allowed to continue operations on taxpayer dollars without state intervention.”
District 3 School Board member Ed Davidson feels much the same way.
What puzzles me is, Ed religiously attended School Board meetings for over 10 years, before he ran for the School Board last year. After the School Board created the volunteer Audit & Fiance Committee, to watch dog the School District and report to and advise the School Board, Ed religiously attended Audit & Finance Committee meetings. Yet he only now feels state intervention is necessary? Attending a few School Board meeting and a few Audit & Finance Committee meetings in the fall of 2010, and a few more meetings in early 2011, convinced me that state takeover of the School District was necessary.
Outgoing Director of Finance and Performance Ken Gentile has stopped returning calls from The Citizen requesting comment.
On March 1, Superintendent of Schools Mark Porter notified Gentile, and his Director of Operations Michael Kinneer — who used to be the chief financial officer — that their contracts would not be renewed.
Many of the findings could affect future borrowing costs and finances.
No kidding.
The district’s Audit and Finance Committee is scheduled to tackle some of the issues when it meets at 9:30 a.m. Monday in Marathon. The School Board will discuss the panel’s recommendations at its meeting Tuesday. Porter must explain the district’s side of the story in a reply to the Auditor General’s Office by March 19.
Here are the first seven of the report’s findings:
• The only “Significant Deficiency” in the report states that “financial reporting procedures could be improved to ensure that transactions and note disclosures are properly reported.”
Specifically, Beckwith said, “The district overstated instruction and depreciation/amortization expense by $4.38 million and $2.72 million, respectively, and understated depreciable capital assets and facilities acquisitions and construction expenses by $5.27 million and $1.83 million respectively.”
She called it “blatant misreporting.”
That, and/or blatant not having a clue incompetence.
Beckwith also noted that basic accounting principles require explanatory notes on financial statements, in particular on the credit risk of district investments representing 5 percent or more of total investments.
This was not done, she said.
Apparently, standard operating procedure for this school district.
“This investment note disclosure … was omitted by the district on a $2,223,000 investment in Fannie Mae Subordinated Benchmark Notes, which at the time of the audit, represented approximately 29 percent of the investments … .”
Davidson added: “We failed to properly account for $7.1 million in the proper expense categories. And we were cited for similar mistakes for the last four years in a row, which doesn’t sound like improvement to me.”
• Miscalculations may mean the district’s budget actually represents less than 3 percent of its general fund. Under 3 percent means the state must be notified and could lead to state action.
“Since the district’s General Fund balance, as of June 30, 2013, was not properly calculated … the total was overstated to represent 5.5 percent of General Fund revenues,” Beckwith said.
It’s a serious matter, Davidson said.
No kidding
“Every business in the country is required to include in their financial statement all the money they know that they owe to anybody,” he said. “The School District, however, didn’t do that. “The auditor points out that the district has not reported that we are short $1,901,332 in [workers'] compensation reserves, or $900,000 in health insurance reserves, nor the $652,260.42 in possible repayments for questionably spent federal funds. If we subtract those figures from our alleged fund balance, we’re practically broke.”
Gosh, Ed, you knew that last year, and the year before, and the year before, etc. Are you now going to call for a state takeover of our school district?
• Minutes of meetings were not provided to the public in a timely manner, contrary to the Sunshine Law.
“During fiscal 2011-12, the board held 26 public meetings for which minutes were required … . The minutes for 18 meetings were not approved until an average of 74 days after the next regular meeting.” After the School Board approved the minutes, Beckwith noted, it took an average of 141 days for them to be posted on the district’s website.
• The district was 267 days late paying the $2,117,647 annual payment on its $36 million bond — basically a mortgage — on the Horace O’Bryant Middle School, which is still under construction. The interest on the loan is partially subsidized by the federal government.
Beckwith called this finding “one huge red flag.”
No kidding
Davidson has called it “simply stunning.”
Actually, it was business as usual, Ed.
Gentile has said it was an oversight due to the district receiving “an incorrect invoice” from the bank, but Beckwith didn’t buy it.
Who would buy it, but maybe 6-term school board member, Andy Griffiths, on whose many watches all of this cumulation kept cumulating, even as Andy kept crowing publicly about what a great school district this is. Well, your folks of the Keys, you reelected him by a landslide, I suppose you wanted more of the same.
“Does one need to ask how the School District is not aware of their obligation on a $36 million bond issue?” she asked.
Davidson thinks this finding is the most important one.
Hell, Ed, all of the findings are important, but for me, the most important finding is the reserve fund balance continues to be way understated, on purpose, and there is not way you and the other members of the School Board didn’t know that.
“How is that not the most egregious finding?” he said. “It’s basically a mortgage payment. If a homeowner has a payment to make, would they wait for the bank to realize its mistake and contact them?”
• There were no restrictions listed on how $4.96 million in capital project funds could be spent, the audit reported.
This is an “accounting 101? issue, Beckwith said.
Davidson explained.
“There are varying levels of legal restrictions on how fund balance money can be spent,” Davidson stated. “And if those are not properly identified, we don’t know how much ready cash we have on hand for emergencies.”
That’s been so a long time.
Beckwith added: “The recommendation on this accounting error is so basic to accounting procedures, one must wonder who is ‘handling the accounting process’ for the School District.”
• The district’s Workers Compensation/General Liability Internal Service Fund had a negative balance of $1.9 million as of June 30, 2012.
Here, the audit points out that unless something changes, the fund will not be able to meet its obligations.
Beckwith noted that steps have been taken to correct the problem. “The district increased the Workers’ Compensation board contribution rate from 2.6 percent to 4.7 percent of salaries for the current fiscal year (2012-13); however, this increase will still leave a deficit of $266,758,” she noted.
This issue has been cited three times in the past four years.
• Accounting for the Adult Education department is still in tatters, the audit indicates.
Davidson has called Adult Education classes “ground zero” of the Monique Acevedo embezzlement scandal. She headed the department when her husband was schools superintendent and is serving an eight-year prison sentence for stealing $413,000 from the school system.
The audit reviewed a portion of the district’s reported 138,334 adult education hours for fiscal year 2011-12.
“Our review of 1,113 hours reported to the FDOE (Florida Department of Education) for 10 students enrolled in 33 classes disclosed that the district allowed students to enroll in different classes that were scheduled to meet at the same time, resulting in 369 hours over-reported for classes unattended by six students.”
Davidson said the reporting of Adult Education data must be revamped.
“Because our method of reporting Adult Education costs and results was as puzzling and confusing to the auditors as it is to me … I think … we’re going to have to pay some of that money back,” Davidson said.
“We also need to fundamentally redesign the way we report … and Superintendent Porter is working on this, thankfully.”
It was the second year this problem was listed.
The rest of the findings will be published in The Citizen’s Sunday edition.
Ed, do you truly think this school district can be straightened out without the state taking it over? That’s not an entirely sincere question.
Comments in The Citizen Blog, on Schmida’s article:
Submitted on Sat, 03/09/2013 – 7:23pm by Loose Stool
Who brought this lady into the accounting mess and why?
Former superintendent Burke under investigation in Lee County.
Submitted on Sat, 03/09/2013 – 5:31pm by joey
Everybody should find this story interesting… our former superintendent has been playing with Lee Counties books as well as Monroe County. It seems fiscal mismanagement is rampant in other communities. http://www.naplesnews.com/news/2013/mar/05/lee-school-board-declines-ind…
Submitted on Sat, 03/09/2013 – 10:59am by yougottabekidding!
Nowhere in this story does the reporter disclose that Beckwith, a supposed “expert” regarding public entity accounting, is actually on the editorial board of The Citizen. Was the reporter “coerced” into giving an “editor” a soapbox on which to proclaim to all who will listen? Shouldn’t this type of story appear on the Opinion page and be labeled as such?
I pulled this from the masthead in today’s Editorial, which is a rant about what’s wrong with the US Government’s finances, as if ranting about that has a snowball’s chance in hell of changing anything there. Seems ranting about the Florida Keys school district’s finances has about the same snowball’s chance in hell chance of changing anything there, but Terry Schmida and Nancy Beckwith get good marks for sticking their necks out.
OPINION
EDITORIAL BOARD
PAUL A. CLARIN/PUBLISHER
TOM TUELL/EDITOR
RALPH MORROW/SPORTS EDITOR
NANCY SCHMOHL BECKWITH
ROBERT CINTRON JR.
KEN DOMANSKI
SHIRLEY FREEMAN
Submitted on Sat, 03/09/2013 – 10:45am by CaptainB
“reflects a system in shambles,” leading her to “wonder how this public entity is allowed to continue operations on taxpayer dollars without state intervention.” Andy I thought this was all taken care of. Maybe it’s time for you to step down, incompetence starts at the top and you are the most senior school board member.
Submitted on Sat, 03/09/2013 – 10:13am by FKeys
How long have the citizens of Monroe County said the district finances are in shambles and have reported it to the Governors office, only for him to say…no my problem man. We have been asking for the state to come in and fix this mess. No one listened to us. MAYBE NOW!?!?
Submitted on Sat, 03/09/2013 – 9:56am by just ask me
Ok, Schmida, where did you find a Nancy Beckwith, she must be a find of Capt Ed. I have been in the area for over 20 years and never heard this person ever comment on the MCSD, I wonder…..hum.
Submitted on Sat, 03/09/2013 – 9:55am by -
There are 18 findings. The worst finding in an audit is called a material weakness. There are NONE of those. The next level of finding is “significant”. There is ONE of those. The last level is additional findings. There are 17 of those. Of the 13 State findings, 10 recommendations are to “enhance existing controls”. Two headline stories? What’s really going on here? Who is Nancy Beckwith? HO HUM.
Submitted on Sat, 03/09/2013 – 9:25am by george
This is what happens when you hire retarded cousins on the sole qualification of blood instead of qualifications. It is time for the state to come in and clean out this district. It is ridiculous how much goes on in the schools that had nothing to do with education. That are even against educational principles. Porter it is time to look into the schools and the principals actions as well. Classes are set by last name, not randomly, where smaller classes are set with certain names, and with certain teachers. This is so non productive it is a joke. Equal education to all, not just for conchs.
Submitted on Sat, 03/09/2013 – 6:56am by Sam Clemens
This is the third year of disgraceful audits! Thank you to the reporter for informing us of the calamity, instead of hiding it like the last two citizen education reporters! (The crackhead, and Jara’s BFF)
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The rest of Schmida’s report is in The Key West Citizen today:
googled pic added by me
More findings from schools audit
BY TERRY SCHMIDA Citizen Staff
tschmida@keysnews.com
The Citizen today examines more of the Florida Auditor General’s recently released preliminary 2012 audit of the Monroe County School District.
Seven findings were explained in Saturday’s paper; this story covers the remaining 11.
Nancy S. Beckwith, a retired commercial and government banker, studied the audit and offered her comments. She said the report “reflects a system in shambles,” leading her to “wonder how this public entity is allowed to continue operations on taxpayer dollars without state intervention.”
Schmida, you really should have told your readers that Beckwith sits on The Key West Citizen’s Editorial Board.
I provided this googled photo of Ed Davidson
District 3 School Board member Ed Davidson agreed with her.
If Ed agrees with Beckwith, why does he keep talking about continuing to try to fix this school district? Why does not Ed face reality and holler to Tallahassee for the Board of Education to come down to the Keys and take over this school district and appoint its own school board, and its own superintendent, none of whom have any ties to this school district, to straighten it out? And, why has not The Key West Citizen Editorial Board written an Editorial demanding state take-over of this terminally dysfunctionally insane school district? The Acevedos proved to be a convenient minuscule diversion away from the real problem, the school district itself. More evidence for a state take-over follows.
Outgoing Director of Finance and Performance Ken Gentile stopped returning calls from The Citizen.
On March 1, Superintendent of Schools Mark Porter notified Gentile, and his Director of Operations Michael Kinneer — who used to be the chief financial officer — that their contracts would not be renewed.
Many of the findings could affect future borrowing costs and finances.
The district’s Audit and Finance Committee is scheduled to tackle some of the issues when it meets at 9:30 a.m. Monday in Marathon. The School Board will discuss the panel’s recommendations at its meeting Tuesday. Porter must explain the district’s side of the story in a reply to the Auditor General’s Office by March 19.
Here are the rest of the findings:
• The district needs to create an action plan to deal with the issue of windstorm insurance.
This is an admittedly tricky area. While at first glance the district appears woefully undersinsured on the replacement property values of $313 million, any property owner in Monroe County can attest to the difficulty of getting good coverage at a reasonable price.
Still, it’s an issue that, as Beckwith points out, potentially exposes the district to significant out-of-pocket costs, in the event of a loss.
According to Davidson, the district needs to have a plan to, in the aftermath of a bad storm, put roofs back on the building, and kids back in the schools.
“We have a $10 million deductible, and then we’re insured for the next $2.5 million,” Davidson said. “The problem is, historically, we have had no plan to fund the $10 million deductible. This has been cited as an issue in the last four audits. We are now negotiating to cover that. We expect FEMA to cover us, but the problem is that they could pay us a year or two later. That’s why we need a credit line, to cover the deductible. I’m delighted that the new administration is negotiating this.”
• The district has been told to keep better track of its payroll processing. This is another one of those “accounting 101″ issues, Beckwith said.
“Fifteen teachers and five other school employees were paid a total of $1,296 for salary and benefits from the Twenty-First Century Federal grant program for after-school instruction during times that overlapped with the standard school workday.” In other words, they were paid twice for the same work.
This issue, too, has lingered over the past four reports, and is also another area where Davidson believes the district may end up having to pay back misspend funds.
“These are defects in what should be routine, basic procedures to account for employee and contractor time on the job,” Davidson said.
• The status of the Monroe County Education Foundation (MCEF) needs to be clarified.
This item is somewhat confusing, but in a nutshell, the report points the finger at the district for not conducting an audit of the MCEF, a board-approved Direct Support Organization (DSO), in accordance with Government Auditing Standards issued by the comptroller general of the United States. As a DSO, the foundation was permitted to use district facilities and resources. However, at a certain point, both the district and MCEF stopped considering the entity a DSO, as it had changed its laws and bylaws, limiting the control exercised over it by the district.
Here the report instructs the board to “document in its official records the basis upon which the MCEF is no longer a DSO. If the MCEF is not a DSO, the board should discontinue providing personal services and other resources to the MCEF at no cost and enter into an agreement with the MCEF for the use of district facilities. However, if the MCEF is a DSO, the board should require that the MCEF’s annual audit be performed in accordance with Government Accounting Standards.”
“The Education Foundation does wonderful things for our students,” Davidson said. “So I am glad that Mr. Porter is presently negotiating a memorandum of understanding to resolve this issue.”
• Better control over the fees collected for after-school day care, and the adult education program, needs to be established.
Once again, Beckwith agrees. “In essence, audits that were said to be performed to match fees based on attendance records with recorded fee collection and deposits did not reflect accuracy, if, in fact, they were actually audited.”
“This is the fourth year we’ve been cited for sloppy accounting in day care,” Davidson said. “And it should be the last year.”
• The district isn’t doing a good job of keeping track of vehicle logs for the cars, trucks and buses it owns.
According to the report, “As of June 30, 2012, district records indicated that there were 170 district-owned vehicles.” Board policy 1440-C “requires vehicle mileage be recorded on a weekly basis, and departments maintain daily usage logs. Our review of logs for 10 vehicles disclosed no evidence of supervisory review of six vehicle logs, no documented official purpose on the logs for one vehicle, and one day that a vehicle was driven when the assigned driver was absent.”
Not only is this unauthorized use of district vehicles a drain on resources, according to Beckwith, “This problem results in increased risk if district-owned vehicles are used for unauthorized purposes.”
“This is just the most basic kind of oversight and accountability,” Davidson said. “There’s no excuse for this to be on the audit.”
• Construction contract change orders must be reviewed and approved more thoroughly.
This issue is one that has been in the news a lot lately, and for good reason. There have been a flood of such orders, relating to the construction of Horace O’Bryant, and they involve large sums of money.
At present the board allows the superintendent or his office to approve change orders that increase or decrease construction costs by $25,000 or less.
However, “In fiscal year 2011-12, the superintendent approved 34 change orders for the Horace O’Bryant School construction project, of which 22 increased the construction contract by a total of $1,050,159 and 12 change orders that decreased the construction contract by a total of $2,770,833,” Beckwith said. “The board approved a change order increasing the contract by $300,000 and another change order by $400,000, but they did not approve the remaining 32 change orders totaling $3,120,992. It is obvious that the district should enhance their procedures to ensure that all change orders are approved by the board.”
Davidson worries that the reality can be lost in the confusing flood of numbers.
The reality, Ed, is what I told you and candidate forum audiences last year: This school district is broken and cannot be fixed from within; a state take-over is needed.
“State law mandates that all change orders on public construction contracts be officially filed in the minutes of the School Board, regardless of the amount in question,” he said. “The reason for this is that contracts are competitively bid, but change orders are not. Unfortunately, none of the 71 HOB change orders were brought to the School Board, and most of them were filed after the fact anyway. They’re supposed to be filed proactively.”
• The final five findings all deal with federal monies.
Beckwith said those findings “reflect little or no record-keeping for federal awards.”
“These include the Title 1 funds that were spent outside the period of availability, totaling $36,793.40. Other Title 1 funds, totaling $18,475.34 were not properly allocated based on rank order of need guidelines.”
Beckwith noted that the audit also “found funds totaling $14,382.37 and $1,296 from the United States Department of Education were paid out in incentive grants and before- and after-school enrichment programs but were not properly documented as required by the regulations accompanying these grants.”
Lastly, the audit disclosed that “the United States Office of Management and Budget (OMB) requires the district to prepare documentation on major federal awards at least once every three years for awards with expenditures that equal or exceed $300,000.”
The district, however, seems to have inadvertently excluded a number of federal expenditures from this schedule, (like Disaster Grants and Public Assistance) which total $359,056.
The net effect, according to Beckwith, is that the district “is also in noncompliance and has significant deficiencies and questioned costs in handling federal awards.”
Davidson, as a School Board member, worries about being able to keep all this federal cash.
“Federal funding always has lots of detailed restrictions,” he said. “There are often gray areas over which the federales may disagree with local spending decisions, and ask for the money back. They have the power to do that.”
As to the larger matter of the district’s finances, Beckwith was frank. “This is the fourth such consecutive audit to contain such disturbing findings,” she said. “If this were the audit of a private or publicly held company, it would have been taken over and/or closed down for such shoddy financial procedures. Apparently our Monroe County School District is … brazen enough to think they can continue to violate basic financial accounting rules and guidelines.”
Davidson concurs.
“When you come down to it, this really is all about sloppy accounting. It’s the No. 1 issue that we have to fix.”
No, Ed, the No. 1 issue is this school district is systemically screwed up, and therefore it cannot be fixed from within and needs to be fixed by people who have no stake in it; people who are not worried about social and political fallout, or getting their car tires slashed, or their homes fire-bombed, or whatever. You, Ed, of all people, a public watchdog and aggressive citizen activist, who attended school board meetings for over ten years, and who attended all Audit & Finance Committee meetings, should not need to be told what is needed to fix this school district. From the day you were sworn in to serve on the school board, you should have clamored for a state take-over, and used the ensuing endless liturgy of SNAFUS to make your case.
Sloan Bashinsky