YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-77

October 2005

The Marshfield R-I school district does not have formal written bidding policies and procedures for non-capital expenditures.  Some items were not bid or adequate bid documentation was not retained for purchases made during the year ended June 30, 2004, including:  $66,811 for cleaning supplies; $39,297 for computer supplies and $39,057 for office supplies.  District employees indicated that in some instances bids were solicited through telephone quotes or other direct contacts with vendors, but documentation was not always retained.  Other instances of documentation on bidding or price comparisons not being retained include: $303,000 for food for school lunches; and $186,400 for materials, excavation work and land for a building trades' class project.

During the year ended June 30, 204, the district spent almost $1 million on contracted transportation costs.  The school district did not solicit bids for these transportation services and the district does not have an adequate system to control and monitor fuel purchased for the buses.  Fuel is ordered by the contractor and stored in fuel tanks located on the contractor's property.  The district is responsible for paying for the fuel but does not require the contractor to provide fuel usage logs to document the amount of fuel used.

The district has used the services of the same architectural firm for several years without any documentation of the consideration of other firms.  Additionally, the district does not have a written policy for the selection and procurement of companies or individuals for some professional services, including physical and occupational therapy services, and  education training services.

The district paid contractors approximately $214,000 to roof a portion of two elementary buildings and did not require the contractors to provide supporting documentation of wages paid to ensure compliance with prevailing wage laws.  In addition, the district did not always prepare IRS 1099-MISC forms as required and vendor invoices or other supporting documentation were not obtained or retained for some expenditures.

The school district refinanced $9.7 million in general obligation bonds in March 2004.  The district sold these bonds through a negotiated instead of a competitive sale.  Historically, negotiated bond sales result in increased interest costs. 

Controls over petty cash, change funds, and student activity fees need improvement.  Our review noted that district offices hold numerous cash funds without adequate records to account for the funds on hand.  During February 2005 we counted funds on hand at all district locations which included 36 separate cash funds totaling approximately $15,200.  Improvements such as limiting access to funds, depositing receipts timely, and discontinuing the practice of cashing personal checks from district receipts are recommended.

District accounting procedures need improvement.  District offices processed approximately $430,000 in student lunch collections between July 2004 and May 2005, however collections are not always reconciled to amounts posted to the districts computer system.  Also, vending machine commissions are not monitored and the district does not have adequate procedures to follow up on old outstanding checks or non-sufficient funds checks. 

It is questionable if some board members complied with the district's conflict of interest and financial disclosure policy.  The district paid approximately $2,000 in 2004 and $1,600 in 2003 for bus driver physicals from a local physician who is a School Board member.  Additionally, the district paid approximately $147,500 to a business owned by a board member's son for computers during the year ended June 30, 2002.  Price quotes were obtained for the computer equipment by the Director of Technology; however, documentation for the selection of this vendor was not documented in the board minutes.

The audit report also includes some other matters related to expenditures and contracts, administrator contracts, board meeting minutes, district procedures and non-resident tuition, foundation monitoring, and asset records and procedures upon which the school district should consider and take appropriate corrective action. 

Complete Audit Report