Report No. 2009-72
July 2009
Complete Audit Report
The following findings were included in our audit report on the Liberty 53 School District.
The district’s financial condition has declined and is expected to further deteriorate. The operating funds balance at June 30, 2008, was $12.7 million and is projected to be deficient by $12.9 million at June 30, 2011, if major modifications are not made to disbursements. Prior administrations have spent irresponsibly during prosperous times, failing to make concessions needed to maintain financial stability during leaner times. In addition, prior administrations did not have adequate long-term financial plans. According to district officials, significant, unsustainable raises have been given to teachers and administrators in the past several years. The district's 5-year strategic plan is now out-of-date, having last been updated in fiscal year 2004.
Costs of capital improvements to be paid from various bond issues were not adequately tracked, causing cost overruns and contributing to the deteriorating financial situation of the district. Subsequent bond issues and other financing measures were used to pay for some of these capital improvements. Over $7.25 million in capital improvement disbursements reviewed by the independent CPA for the period July 1, 2004 through June 30, 2008, were coded to the Operating Fund, rather than the Capital Improvement Fund. Additionally, budget amendments were not prepared timely.
“550-Retiree” employment contracts did not appear reasonable and were not supported by documentation of time worked. In addition, the consulting provision in former Superintendent Taveau’s amended contract was not adequately defined. Travel allowances paid to executives/directors, principals, and assistant principals are not included in contracts or approved by the School Board and travel allowances paid the principals and assistant principals are not supported by actual mileage and are not included on W-2 forms.
Several purchases were not competitively bid or competitive requests for proposals were not obtained. The district does not periodically solicit engineering/architectural and surveying/planning services for its construction projects, as required by district policy and state law. Per district officials, the services of the same two firms have been used since at least 1999. The district has not conducted, or periodically re-conducted, a selection process for other professional services, and the same vendors have been used for several years. In fiscal year 2008, the school district issued $15.2 million in Missouri School Boards' Association Insured Lease Participation Certificates and $58 million in general obligation school building bonds. The district sold these certificates and bonds through a negotiated sale instead of a competitive sale. In addition, since at least 1997, the School Board has been using the same bond underwriter who also acts in a dual capacity as financial advisor.
Credit cards were frequently used to purchase meals at local restaurants and the district often provided food for meetings involving district personnel. The purpose of the meals and those attending were not always documented. The district has not developed a mechanism to track these local food purchases and we were unable to gather information regarding the extent of such purchases. Supporting documentation was not retained for some credit card purchases and purchasing card transaction limits for some individuals may be excessive. Several invoices approved for payment by the district included state sales tax.
There were several real estate contracts entered into without board approval and a request for proposal (RFP) was not issued soliciting the real estate services of the firm handling real estate transactions.
The district did not analyze the cost-effectiveness of the proposed contract with the local country club versus building tennis facilities in the city park. Additionally, the district did not properly bid for the construction of the tennis courts and the construction of the project was allowed to begin before a written agreement between the district and contractor was executed.
Other audit findings in the audit report relate to vehicle and fuel usage, transportation costs, wireless communication devices, follow up actions regarding our safe school initiative review, the Flintlock Flyover Project, contracts with Scientific Learning for implementation of the Fast Forward program, and contracts with the Cooperating School District of Greater Kansas City.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
