Report No. 2008-29
May 2008
Complete Audit Report
The following findings were included in our audit report on the Drexel R-IV School District.
The Drexel R-IV School District paid approximately $192,756 in severance wages and benefits to the former Superintendent, who resigned in February 2007. The Board voted unanimously in January 2007 to buy the remainder of the former Superintendent's contract, and voted six to one in February 2007 to approve a negotiated separation agreement. Included in the $192,756 was approximately $12,102 in retirement and insurance benefits that did not appear to be specified in the termination clause of the employment contract for the former Superintendent. In addition to the severance payments, the district paid approximately $10,900 to an interim superintendent for the remainder of the school year, and $2,000 to a law firm to prepare the separation agreement. Since the former Superintendent's employment contract provided an option to terminate employment without severance pay, and her written resignation letter indicated she was resigning for personal reasons, it is not clear whether the severance payments were justified.
The district accepted a settlement totaling approximately $27,000 in a residency lawsuit, and at the same time may have received state funding for the students named in the lawsuit. Since the settlement appears to be in lieu of tuition, it may not be appropriate for the district to retain both the settlement and the state funds. Additionally, the district incurred approximately $90,000 in costs for legal and other professional services related to this case.
The school district did not solicit bids for transportation services, and does not have an adequate system to control and monitor fuel purchased for buses. The school district has contracted with the same transportation company since 1985, and during the two years ended June 30, 2007, spent approximately $334,000 on contracted transportation costs including approximately $299,000 to the transportation company and approximately $35,000 for fuel. Furthermore, the district's enrollment and the number of students riding the bus have decreased significantly since 2005, and the district should evaluate various options to provide more efficient transportation.
Bids were not always solicited by the district nor was bid documentation always retained for some major purchases, such as playground equipment and classroom renovations. Additionally, during the two years ended June 30, 2007 the district paid approximately $74,000 to a law firm without a written contract, and the firm's hourly billing rates increased by as much as 19 percent during this time period. Further, proposals were not solicited for legal and auditing services, payments for contract labor were not tracked and reported, and procedures for approving expenses need to be improved.
Financial reports provided to the Board do not provide the detail necessary to properly monitor district finances. Additionally, the district's budgets and published financial statements were not in compliance with state law.
The Board approved paying $18,800 to 34 district employees for curriculum development that they believe resulted in improved MAP (Missouri Assessment Program) test scores from the previous school year. These payments were not included in employees' contracts, taxes were not withheld and amounts were not reported on their W-2 forms. These payments appear to represent additional compensation for services previously rendered and, as such, are an apparent violation of the Missouri Constitution and are contrary to an Attorney General's opinion.
The Board's procedures for conducting and documenting board meetings need improvement. Closed meeting minutes did not document how some topics discussed in closed session complied with state law. Additionally, meeting minutes did not always include discussion topics or votes, documentation of roll call voting to close meetings, or evidence of how some decisions made during closed meetings were subsequently made public. Further e-mails sent by the former Superintendent to all board members, including at least one e-mail polling board members for a decision on an issue, were not copied to the custodian of records to be retained with the official board minutes.
Also included in the audit report are recommendations related to accounting controls, bank depository agreement and maximizing revenues, and capital assets.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
