SMMUSD HDQTRS — The Board of Education is expected to accept the report of the Measure BB Citizens’ Bond Oversight Committee at its meeting tonight, a document that requests more clarity and alacrity on the part of both the district and its auditors.
The committee concluded that it could not state “beyond reasonable question” that the information it received from the district concerning the way Measure BB funds were spent reflected that the district had acted in compliance with state law.
Members also took pains to state that they couldn’t draw a definitive conclusion from the information one way or another.
“We do not have confidence in an information source, the Special Audit Report, deemed to be critical in reaching a definitive conclusion,” the report reads.
The statement refers to a report produced by the independent auditing firm Christy White Accountancy, based in San Diego, which reviewed approximately 20 percent of all transactions to verify the accuracy of expenditures, budgets and reporting to determine whether or not the district was spending money appropriately.
The language of the citizens’ committee analysis may have come out harsher than anticipated, said Committee Vice Chair Neil Carrey.
“We couldn’t make a definitive statement based on the year we were dealing with, and what we had seen in the use of bond proceeds,” Carrey said. “That doesn’t mean we feel there’s a potential issue.”
In fact, Carrey felt confident that there was no discrepancy in how the district had used the money.
The committee took issue with how long it took to get the materials to review, cases of commingling of BB money with other unrelated money and the clarity of the Special Audit Report.
Committee members were asked to respond to an audit of fiscal year 2009, Carrey said, which spans the dates between July 1, 2008 and June 30, 2009.
“That was part of the problem, that we need to speed up this process so there’s not such an enormous time lag,” he said.
The discrepancy also makes pieces of the report throwback information. In many cases, the district has already fixed problems noted by the committee.
One such was an informal loan of Measure BB money to the Boys and Girls Club for a building project, which resulted from a commingling of funds for the club and Measure BB in the same district account.
Although the club paid for the majority of the project, the district served as the agency that hired and paid contractors.
The district then billed the Boys and Girls Club for the work the contractors had performed, said the district’s Chief Financial Officer Jan Maez.
The money temporarily missing from the account represented a payment by the school that had not been immediately reimbursed by the club, Maez said.
“We don’t disagree that could be considered a loan, and probably was something we’d want to avoid,” Maez said. “The fact that it was all in one fund facilitated that to occur.”
Since, the funds have been separated completely, and both the principal money and interest have been returned to the BB fund.
The committee also noted a lack of clarity in the report, specifically that pieces of it were factually inaccurate, and that it omitted information that could make it appear to the layperson that serious accounting errors had been made.
In one instance, the firm made a side-by-side comparison of the year’s first adopted budget and the actual expenditures without including budget adjustments approved by the Board of Education along the way.
At first blush, it seemed that the school had overspent by $7.4 million, it reads.
“We adopt a budget based on the best information we have at the time,” Maez said. “That is a living document, and is changed regularly by board action.”
Carrey likened the experience of examining the audit to going on a first date — it takes time for people to be comfortable and communicate with one another.
In this case, he admitted, the committee relied too heavily on the Special Audit Report, although it felt that the district could have improved what went into the document and what was left out.
“It’s important to cultivate greater consciousness, to make sure things are run in such a way that these inadvertent errors will not occur,” he said.
Clarity is key in the post-Bell world, he said, referring to the July 2010 revelations that corruption had run rampant in the now infamous Southern California city of Bell.
“Sometimes perception is more important than the facts,” Carrey said.
In a five-page response to the report, district staff noted that improvements in the reporting method could and would be made, although it did not believe that all of the requested information could be incorporated in the Special Audit Report.
Staff noted that all materials are open to the committee and the public, but that inclusion in a single report would make it difficult to conform to state reporting requirements.
“The primary message here is that the district is working closely to improve the reporting and make it more complete,” Maez said. “I believe that the reporting we’re doing is accurate. I also believe that how we’re spending these bond funds is completely in sync with what the voters gave us this money for.”
Measure BB authorized the district to sell bonds for up to $268 million for capital improvements at secondary campuses in the district and the construction of a new school at Edison Elementary, as well as a number of smaller safety projects.
To date, approximately half of that money has been bonded.