Whitley Co. school district works to straighten out finance records

Nearly four months after the Whitley County school district’s finance officer was fired amid allegations of misappropriation of school funds, school officials are still working to get their financial records in order.

This includes scrambling to come up with a state required 2 percent contingency fund for the current fiscal year, which started July 1, after discovering a recent shortfall in the budget.

During a special called Whitley County Board of Education meeting on Sept. 15, which took the place of the regular monthly meeting, new District Finance Officer Alicia Logan and Deputy Superintendent Paula Trickett updated the board on the 2015-2016 annual financial report and the current working budget.

Logan was hired as the new district finance officer about two months ago to replace Leigh Burke, who was fired in June.

“A review of bank statements and other financial information and documents confirm that you have been dishonest, and have indulged in other types of misconduct, such as falsifying information supplied to the district and violating local policy and state and federal statute and regulation,” Superintendent Scott Paul wrote in Burke’s June 16 termination letter.

“According to the information I have, you have knowingly and intentionally used school district funds to pay personal bills and have falsified information on absences reports. The aforementioned are the grounds upon which I am terminating your contract with the Whitley County School District effective June 2, 2016.”

Logan noted that the ending balance for the 2015-2016 fiscal year on June 30 was $429,576.99, which means the district had a 1.4 percent contingency fund, which is short of the state mandated 2 percent.

Logan said the reason the district fell below this threshold is because financial officials discovered that several projects hadn’t been closed out properly over the last year and some projects for multiple years. Money to close out those funds properly totaled about $342,000 Logan noted.

“If the general fund hadn’t had to absorb that, we would have a 2.6 percent balance,” Logan said. “We’re looking forward to a better year in 2016-2017.”

Trickett noted that this fiscal year’s beginning balance is significantly lower than what school district officials thought they would have to work with when they made the working budget in May.

“We’ve had to go through the budget to find some more places to reduce expenditures,” Trickett said. “We squeezed every drop of moisture out of that towel and we still weren’t close enough.”

Trickett said that Logan discovered there was about $140,000 in capital outlay and building funds that had not been used last fiscal year. School district officials hope to utilize that money for facilities operation and the general fund this current fiscal year in order to help offset the difference.

After the meeting, Trickett explained that the shortfall wasn’t the result of any missing funds, but rather certain funds weren’t closed out that the district thought had been already.

She said there were numerous restricted funds still open, that school officials weren’t aware of, which had been overspent in prior years and had never been covered or reimbursed by the general fund. Those funds were closed out and the expense transferred to the general fund, which is what caused the shortfall.

Trickett declined to call the matter poor bookkeeping.

“I wouldn’t want to characterize it other than to say it wasn’t handled correctly,” she added.

During the meeting, the board recognized Tammy Matney, Pauline Perkins and Mike Harris with September Above and Beyond Awards for their efforts to assist the district through the recent crisis in its finance office.

“We did have a bit of a crisis in our finance office recently,” Paul noted during the meeting. “These two ladies along with Mike stepped up and did whatever was asked of them. They worked weekends. They did things they had never been asked before and probably didn’t know how to do and had to figure out.”

Trickett also commended Logan for many long hours of work she has put in to get the financial crisis sorted out, including many weekends that Logan worked.

The board voted during the meeting to add the position of payroll manager to the finance office.

Paul said the recent finance situation caused school officials to realize that they needed an additional person in the finance office.

In addition, during the Sept. 15 meeting, the board authorized Paul to negotiate with the Whitley County Sheriff’s Department in an effort to lower the property tax collection fee that the district pays the sheriff for collecting its tax revenue.

Paul said that several school districts recently compared notes regarding the fees they pay for property tax collection.

Paul said that the district is currently paying the maximum rate, which is 4 percent.

Last year, the district paid $132,000 in the tax collection fee, which isn’t a large portion of the district’s overall budget, but still a significant sum.

Trickett said that according to the internal e-mail survey that was done, less than 20 percent of districts were paying the maximum rate. Over half of the districts were paying less than 3 percent.

“We are looking for every penny we can save. We are hoping to get that reduced,” Paul noted about the current rate. “I have talked with the sheriff already to some extent. He seems receptive at this point. All we can do is sit down and talk about it and see what we can achieve.”

In other business, the board:

• Approved a performance bond for Logan. Performance bonds are standard for people in government bookkeeping positions that handle cash and are designed to protect government entities in the event of theft or embezzlement.

• Approved a drug testing agreement with the Care Plus Center for student drug testing for the 2016-2017 school year.

After getting a question about how many students are tested, Paul noted that the students are randomly selected during their sport’s season, but not an enormous number of students are tested. He added that there have not been any issues with testing over the last few years.

• Accepted a $12,396.10 reimbursement from the Kentucky Transportation Cabinet’s Division of Maintenance for construction of a new entrance into Pleasant View Elementary School.

• Authorized the superintendent to declare items worth less than $500 as surplus during the 2016-2017 school year, which means that the items can be sold or otherwise disposed of. Paul noted that there is a room at the bus garage where many surplus items are taken and that it is filling up fast.

Trickett jokingly suggested holding a yard sale.

“The cash would be great,” she added.

• Met in executive session for 30 minutes to discuss pending litigation but took no formal action. Currently, there is only one lawsuit pending against the school district.

On March 22, 2016, the parents of a 10-year-old boy, who was run over by a school bus when he got off of it last year, filed suit against the school district, the bus driver, the school board, and numerous school district administrators and employees.

On March 23, 2015, Jonathan Austin Chatham was riding Whitley County school bus #993 home from school when he got off the 1999 International school bus with three other children on Highway 779.

“The victim, Jonathan Chatham, age 10, had just exited the bus, but had not cleared the bus when it began to pull out,” Kentucky State Police Trooper Craig Reed, who is an accident reconstructionist, wrote in the narrative for the traffic collision report. “The juvenile went under the bus tires on the right side of the bus.”

The collision report lists “none detected” under vehicular factors, but notes two human factors, “failed to yield right of way” and “inattention.”

• Prior to the start of the meeting, the board held a brief, 1 minute and 20 second tax rate hearing. After asking three times whether there was any public comment relative to setting the tax rates and hearing none, Board Chairman Larry Lambdin adjourned the tax rate hearing.

During the board meeting, the board set the tax rate for real estate and personal property at 42 cents per $100 of assessed value. This represents last year’s rate minus 0.4 percent for excessive prior year exonerations.

“They basically stayed flat,” Paul said about the tax rate.