The report consisted of several audits and found issues related to policy compliance, lack of management review and some tax expenses not being appropriately spent.
The Appoquinimink Board of Education voted to implement a 10 percent tax rate increase allowed following a property reassessment in July after uncovering a massive deficit due to accounting errors. The inquiry reported a shortfall of $4.9 million.
New Castle County Council member Kevin Caneco was the first to call for an audit. Seven state lawmakers published a letter addressed to the State Auditor shortly after, also requesting the state look into the school district’s finances.
State Auditor Lydia York’s office agreed to conduct a special inquiry July 16.
York’s office released the report Sept. 3. It said the Apppoquinimink Board had tools in place to avoid budget shortfalls but did not use them.
“Tougher questioning of budget assumptions, proactive use of the [Financial Advisory Committee], and transparent communication with the public could have provided time to determine alternative solutions to avert their shortfall,” the report said.
The Board did not communicate these issues to the community even though there were warning signs months ago, according to the report.
“[They] not only blindsided families with a 10% increase of prior year current expense tax revenue but also damaged public trust,” the report said.
The Board works with the superintendent and CFO to maintain the district’s fiscal health. The report found the superintendent Matthew Burrows did not adequately perform his role and “allowed errors to accumulate unchecked.”
The special inquiry also found issues with the CFO, who helps develop the district budget and makes sure the district is compliant with state and federal regulations.
“AOA found no segregation of duties associated with financial reporting,” the report said. “Instead, all reports were prepared and submitted by the CFO. The CFO provided summary reports to the FAC but did not include meaningful supporting documentation to demonstrate their appropriate beginning balance, or to compare the budget to actuals as recorded in FSF. The CFO failed to properly support the District’s fiscal operations as intended.”
The district’s superintendent and CFO did not adequately rely on and seek support from the Financial Advisory Committee, the auditor’s report stated. That committee exists to monitor and review fiscal documents and processes to ensure gaps in budgets are caught early.
Moving forward, York’s office recommended Appoquinimink School District establish better practices in the finance office, implement training for school secretaries, start a review process for budgets and monthly revenue reports and train Board members and other staff to have more in-depth financial knowledge.
It also said the district should format financial and budget reports in an easily understandable way and work with the Delaware Department of Education to improve practices.
The state of Delaware does not currently require school districts to follow standardized fiscal practices. In an introduction at the beginning of the report, State Auditor York said this inquiry might suggest a need to examine Delaware's 19 school districts.
“There is a strong tradition of and need for local control in public education,” York said. “However, the lack of standardization across school district fiscal departments may contribute to situations like the one at Appoquinimink evading the view of regulators and auditors until they become crises.”
The Appoquinimink Board of Education's next meeting is Sept. 9 at 7 p.m.
