Several districts violating the law, state auditors say
Posted on Saturday, December 15, 2007
Several school districts failed to obtain prior approval of the state Department of Education for transactions ranging from the sale of property to a nonprofit group partially owned by a school board member to contracting with a district official’s daughter, state auditors said Friday.
The Bearden, Bergman, Clarendon, Conway and Huntsville districts were supposed to get the department’s advance approval under state law, said deputy legislative auditor Larry Hunter.
The Legislative Joint Auditing Committee voted to refer the audits to prosecuting attorneys for their review.
“We are seeing more and more of this,” Rep. Nathan George, DDardenelle, said afterward.
The audits were for fiscal 2006.
George said he believes that the violations are the result of some officials’ ignorance of the laws and other officials’ belief that they won’t be caught.
“I guess it doesn’t bother people like it should,” said George, co-chairman of the panel’s Committee on Educational Institutions.
State auditors said the Bearden district sold property in May 2006 for $ 35, 000 to the highest bidder, the Cayce Charity nonprofit group, which is partly owned by board member Joannie Cayce. The property was appraised at $ 56, 000. Cayce didn’t vote on the sale.
The Bearden School Board didn’t approve a resolution or obtain the department’s approval to sell property to Cayce before the transaction as state laws require, the audit said.
The district also purchased goods and services totaling $ 20, 384 from family members of district technology coordinator Charles Hudson and $ 2, 092 from a company owned by Hudson without a board-approved resolution or the department’s approval, state auditors said.
Ronald Smead, superintendent of the Bearden district, said in a letter to the Legislative Audit Division that the district has established procedures to ensure that ethics laws in Arkansas Code Annotated 6-24-105 and 6-24-106 are followed.
The Clarendon district’s School Board didn’t obtain the department’s OK in a resolution to sell the Holly Grove High School property to the city of Holly Grove. The board also didn’t adopt a resolution to justify a lease with Kingdom Builders Ministries Inc. or obtain the department’s approval, the audit said.
The high school property was sold for $ 10 and “other good and valuable consideration,” which included future maintenance and repair expenditures to the city of Holly Grove, in July 2005 after the School Board’s approval, the audit said. Thenboard member Lula Tyler was the mayor of Holly Grove, the audit said. Tyler resigned from the board in May of this year.
The city leased the property to Kingdom Builders Ministries, whose chief executive officer is the mayor’s son, for five years at $ 100 per year in July 2005, the audit said.
The Holly Grove elementary school building was destroyed by fire in December 2006, the audit said. After the fire, the School Board decided to lease part of the former high school property to use as an elementary school from Kingdom Builders Ministries for two years for a $ 3, 000 relocation fee, plus $ 1, 000 a month, the audit said.
George La Fargue, superintendent of the Clarendon district, said he and a state official and an insurance adjuster agreed that the old high school property should be used after the elementary school burned on Dec. 16, 2006.
“We were able to provide a safe, dry and healthful learning environment when the second semester began. Leasing was the most economical solution,” he wrote in a letter to the Legislative Audit Division.
As for the audit finding that the School Board didn’t get the Education Department’s approval of a resolution to sell the high school property to the city of Holly Grove, La Frague wrote, “Response: Correct.” A daughter of Conway School District food services director Sharon Burgess received $ 11, 592 and $ 9, 170 for a professional services contract in the 2006-07 and 2005-06 school years, an audit said. This was done without a School Board-approved resolution or approval from the department, the audit said.
Greg Murry, superintendent of the Conway district, said district officials instructed Burgess to discontinue the arrangement and terminated the contract.
“Administrators of Conway Public Schools have been instructed and will continue to be instructed on ethics laws pertaining to public schools in Arkansas,” he wrote in a letter to the division.
The Huntsville district paid maintenance worker Ted Brumbley $ 9, 000 for various painting projects without a board-approved resolution or approval of the department, state auditors said.
Alvin Lievsay, superintendent of the district, said a lack of internal controls allowed Brumbley to be hired during the summer and paid more than allowed for two painting jobs. The district has put in place internal controls to ensure compliance with Arkansas Code Annotated 6-24-107, he said.
The Bergman district purchased custom-made bookcases costing $ 7, 472 from teacher Fred Howard without the department’s approval, auditors said.
Joe Couch, superintendent of Bergman, said district officials will provide proper oversight for “all related party transactions” in the future and seek the department’s approval when they are required to do so.
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