The Herald, Sharon, Pa.

September 12, 2013

Career Center officials decry audit

By Joe Pinchot
Herald Staff Writer

COOLSPRING TOWNSHIP — The state Auditor General’s Office came down on Mercer County Career Center for some of its operational practices, but center officials called the report a bunch of hooey.

“I don’t agree with a whole number of things (in the audit),” said Administrative Director Rachel Martin, adding that she was offended by some of the comments in the report.

Officials said the report insinuates things that are not true.

“The implication (in the audit) is there is some untoward behavior here and that’s not the case at all,” said David DeForest, chairman of the center’s 10-member Joint Operating Committee, the equivalent of a school board.

The audit also implies that the JOC is not doing its job, Martin said.

“The board works very hard,” she said. “They provide a lot of oversight.”

The audit released Friday covers the period Nov. 30, 2010, through Oct. 18, 2012.

Auditor General Eugene DePasquale issued a news release calling for the center to overhaul its business operations and budget practices and said the center violated state law and various other requirements.

“Mercer County Career Center must make some serious improvements to become a more efficient and accountable educational institution,” he said.

The audit had three specific findings: internal control weaknesses in the business office; business office failure to follow provisions of construction bond agreements concerning its renovation project; and failure to obtain foster student information. The first two findings cover a number of perceived ills.

Center officials are particularly miffed that the audit alleges the center overcharged its member school districts – which pay 60 percent of the center’s budget – by overestimating the center’s expenses.

“By using the inflated budget figures, the center received more tuition from its participating school districts than was necessary,” the audit said.

The amount of excess revenue was $1.1 million in 2011-12 and $1.2 million in 2010-11, the audit said.

After the center has actual enrollment figures and independent auditors have issued financial statements, officials reimburse the school districts the amount they overpaid, the audit said. The reimbursements occur in April each year.

“Our audit ... found that the center’s 10-month delay in refunding the excess tuition to the school districts allowed it to accumulate an additional $1 million in revenue, which provided the center’s general operating fund with a cash cushion,” the audit said. “Best business practices dictate that such excess tuition should be refunded timely.”

The cash cushion may be convenient for the center but “has the reverse effect for the supporting districts,” the audit said.

DeForest, a Sharpsville School Board member, said career center officials and state auditors have a difference of opinion as to how the center should prepare its budget. The center puts together a budget at the end of the calendar year to give school boards the opportunity to build it into their own budgets, which are not passed until late spring, in most cases.

The center must prepare its budget without knowing certain nonfixed costs, such as its health-care premiums for the next year, DeForest said.

The center’s budget process has been the subject of previous state and local audits and no one has raised any concerns until the latest audit, he said.

“We didn’t do anything different than we’ve ever done,” said DeForest, who called the center well-funded and well-run.

Martin said she has no way of knowing how many students will be enrolled in any of the center’s programs for the next year when she is preparing the budget. Staffing is based on enrollment.

“I do the best I can to estimate the number of students based on the data I have,” she said. “I can be right on or be 100 off. I have to estimate their needs. I don’t inflate anything.”

Career and technical education is very expensive, which is why it is offered by a centralized school and not by home school districts, she said.

Martin added that any excess money school districts pay goes back to the districts and, unlike the home school districts, she does not carry a rainy day fund balance. She starts each year with no money, she said.

“There’s no money missing,” DeForest said. “There’s no misappropriation of funds. It’s a matter of timing.”

The state audit also was critical of how officials handled the money during the center’s 2012 expansion, which has caused the member districts, who funded the project, to receive less reimbursement from the state than they would be eligible for.

The center also borrowed from its general operating funds to pay construction costs, something it could not have been able to do without the cash cushion collected from overcharging districts, the audit said.

The center said school districts did not submit payments in a timely manner, which caused it to use general operating funds.

The center was trying to pay its bills when it borrowed $13 million for a project that topped $15 million, DeForest said, and did nothing out of line with what member districts would have done in the same circumstances.

Martin said she is asking the JOC, which next meets Sept. 24, to respond to the audit.

The audit can be seen at www.auditorgen.state.pa.us