Office of the State Auditor of Missouri
Report No. 2005-84
The following problems were discovered as a result of an audit conducted by our office of the Davis R-XII School District.
Despite a growth in revenues, the district has spent more than it received during the last two years, resulting in a financial decline. During 2002, the district opened an Early Childhood Center for both preschool aged children and infant and toddler aged children. Center revenues were not sufficient to operate either the preschool or infant and toddler centers, which has contributed to the district's deteriorating financial condition. In addition, the district has not adequately budgeted or monitored the expenditures of the Center. On June 30, 2005, the district discontinued providing services for toddler aged children.
The district is only provisionally accredited by the Department of Elementary and Secondary Education (DESE). A provisionally accredited district has not met enough of the Missouri School Improvement Program (MSIP) standards and indicators to be accredited. Further, based on the district's 2005 Annual Secretary to the Board Report, the Davis R-XII School District will be classified as a "financially stressed" district by DESE. For fiscal year 2006, the district has again budgeted expenditures to exceed revenues and as a result, further reducing its fund balance. Although the board president recommended an increase in the district's tax levy be placed on the August 2005 ballot, the board did not approve the ballot issue. In addition, the district overspent its budgets for the years ending June 30, 2005 and 2004. It appears the district is facing serious financial problems and action is needed to increase revenues or reduce expenditures.
The school board amended its budgets (at fiscal year end) after the actual expenditures were incurred. In addition, the original budgets approved by the school district were not accurate and complete, and did not include the superintendent's and lead teacher's salaries. Further, the board does not receive a detailed monthly financial report to monitor the financial condition of the district.
In December 2003, the board approved additional compensation in the form of stipends ranging from $250 to $500 to four employees for work previously performed relating to the district's MSIP report. These stipends or bonuses appear to represent additional compensation for services previously rendered and, as such, may violate the Missouri Constitution and appear contrary to an Attorney General's opinion.
The Superintendent did not prepare and submit time sheets to the board documenting the number of hours worked in the 2004-2005 and 2003-2004 school years. In addition, various administrative employees do not prepare timesheets.
The district provided over $11,265 in educational assistance to its lead teacher without adopting an educational assistance plan or policy or entering into a written agreement with him regarding any employment requirements of the education assistance. In addition, the district did not report the value of the educational assistance provided to the lead teacher on his W-2 form as a taxable benefit.
The district's current bidding procedures could be made more effective by adopting a more comprehensive policy. The district does not perform a reconciliation of district invoices, an approved listing of bills, and the actual checks written. Additionally, the district needs to improve controls over canceling invoices, obtaining adequate supporting documentation, ensuring Forms 1099 are filed, preparing written contracts and reconciling fuel purchases and usage.
The open meeting minutes do not always adequately document the specific reasons for closing the meeting and actions taken by the board in the closed meetings. The school board held 20 closed meetings from July 2003 to July 2005 and all had discussions that did not clearly comply with the provisions of the Sunshine Law. In addition, the district's school board failed to follow its own policy for filling board vacancies.
The school board failed to follow district policies regarding student residency waivers and retaining documentation of substitute teacher's background checks, applications or certification. In addition, one substitute teacher's certification had expired prior to the district hiring him. The district also employed a librarian, guidance counselor, and physical education teacher that were not certified or appropriately certified by DESE to work in these subject areas during the 2003-2004 or 2004-2005 school years. Further the district has not corrected some of the concerns addressed in DESE's MSIP report.
Controls over meal and tuition collections including segregation of duties, depositing intact and timely, issuing receipts, and tracing meal accounts receivables/payables need improvement. In addition, employees who collect receipts and have access to monies are not bonded.
The audit report also includes some other matters related to payroll procedures, district expenditures, accounting controls, depositary contract and collateral securities, and general fixed assets, upon which the school district should consider and take appropriate corrective action.
Complete Audit Report