By TESA GLASS
MT. VERNON — —
The State Auditor General has released a report on the finances of the Hamilton and Jefferson Counties Regional Office of Education for 2011 — with 14 major findings including questionable expenditures for operations and various programs, and lack of documentation of revenues and expenditures.
The audit covers the last year of the tenure of Bryan Cross as regional superintendent of schools. Cross’ comments are contained within the audit, which was released last week.
A synopsis of the findings state the office under Cross’ last term “prepaid salaries and contracts before work was performed; was lacking documentation associated with certain related party transactions; lacked documentation to support payments made to employees in addition to their regular salaries; did not have adequate internal controls over employee benefits; had questionable expenditures for ROE operations and various programs; did not have adequate documentation to substantiate revenue and expenditures; did not have adequate internal controls over cash disbursements; and did not have adequate controls over compliance with laws and regulations.”
For the fiscal year which ended June 30, 2011, the ROE had revenues of $3.9 million, up from $3.7 million in fiscal year 2010. Total expenditures in fiscal year 2011 came in at $4 million; in 2010, the expenditures were $3.6 million.
According to the Auditor General report, the ROE prepaid $4,264 to a former employee on June 30, 2011, for a contract for her to be available for the 2011 audit to be performed at a later date in 2012. However, the employee was not retained by the current Regional Superintendent, Ron Daniels, who took office July 1, 2012.
“Our review of ROE documentation noted two issues relating the fiscal year 11 salary payments to two former employees,” the audit states. “The first was that there was conflicting documentation as to whether these two employees were 200 day or 245 day employees in FY11. Prior to FY11, the positions were 245 day employees, however, the FY11 salary documentation and pay schedules showed them as 200 day employees. In contrast, their FY11 annual salary amounts remained unchanged from FY10, even though the number of days worked was reduced from 245 to 200 days. Furthermore, they took vacation days in FY11 even though, according to ROE policy, only 245 day employees earn vacation days (not 200 day employees).
In addition, the auditor could not determine if the amounts paid to the former employees were appropriate as there was inadequate documentation.
“Their pay schedule shows their annual salaries were for the period Sept. 1, 2010 through Aug. 30, 2011,” the audit explains. “They were receiving semi-monthly pay checks at 1/24 of their annual salary. However, beginning in April 2011, their semi-monthly checks were increased so that they would receive their total annual salary by June 30, their semi-monthly pay checks were increased so they would receive their total annual salary by June 30 as opposed to Aug. 30, 2011 (i.e., they were prepaid salaries payable in July and August 2011). These two employees were not retained by the current Regional Superintendent who took office July 1, 2011.”
The employees were also paid additional compensation of more than $4,500 each for days worked in June 2011 for closing fiscal year 2011 grants, preparing files for audit and transition. They were paid from the vendor module of the accounting software instead of the payroll module, which resulted in no payroll taxes withheld and underreporting of wages to the taxing authorities.
According to the audit, Cross, “also noted that salaries were not reduced when their work days were reduced from 245 to 200 days in order to provide them with end of career retirement incentives and for the extra work they had performed for the three previous years.”
The audit also finds there was a lack of documentation for “related party transactions.”
“An employee was added to the Regional Office’s payroll in November of 2010,” the audit explains. “Payroll ledgers indicate that she was paid $16,968 over the period of November 2010 through June 2011. The Regional Office of Education 25 could not locate a personnel file or contract for this employee that would document her rate of pay, job responsibilities she was required to fulfill. Time and effort sheets could also not be located to substantiate this rate of pay. According to the current Regional Superintendent, this employee was a relative of a former ROE employee.”
Another employee was added to the payroll in November 2010 as a maintenance/repairman.
“Payroll ledgers indicate that he was paid $18,540 over the period of November 2010 and June 2011. By comparison, the ROE’s full-time maintenance/repairman earned a salary of $21,882 for the entire fiscal year. While the ROE had a personnel file on this employee, they could not locate documentation that would document his rate of pay, job responsibilities or any other contractual responsibilities he was required to fulfill. Time and effort sheets could also not be located to substantiate this rate of pay. According to the current Regional Superintendent, this employee was a relative of a former ROE employee.”
Cross’ wife was also listed as receiving additional pay from the office.
“The former Regional Superintendent’s wife was paid $1,200 beyond her regular pay for work performed during spring break in March 2011 as well as an extra $4,400 in June 2011,” the audit states. “While the Regional Office of Education 25 did locate time and effort sheets for this extra work, they could not locate documentation establishing the rate of pay beyond her normal daily rate.”
Cross responded that his wife only worked part of the fiscal year.
“He noted that she was paid at a daily rate of $188.93 which is consistent with other ROE employees who held a similar position and had similar qualifications,” the audit states. “Based upon the six extra days available to be worked during spring break and Easter break and the 23 days available to be worked between the time the school year ended and July 30, 2011, there was little difference in her rate of pay. He noted that all documentation regarding days worked and the time and effort documentation for all employees were maintained by ROE staff and kept on file in the ROE office.”
However, Daniels, in his response in the audit report stated time and effort sheets were not found with other financial documents.
“Upon requests from auditors and further searching, time and effort sheets were found in a ROE 25 storage room located in the Mt. Vernon Township High School warehouse, where older documents are stored,” the audit states. “Time and effort sheets were not found for all employees.”
The audit states several employees received payments over and above their salaries.
“The former assistant regional superintendent received additional payments totaling $4,000 in April and May 2011 for work performed in connection with the Southern Thirty program,” the audit states. “... There was no documentation to indicate why compensation in addition to her regular salary as assistant regional superintendent was appropriate or how this work was not part of her normal, full-time job responsibilities.”
Cross responded in the audit the former assistant superintendent worked an additional 70 to 80 hours at Southern Thirty including many weekend days and evenings, tasks outside her normal scope of work.
“According to the former regional superintendent, this additional work was sought by the assistant regional superintendent to increase her creditable earnings in preparation for a retirement she did not anticipate. He stated that there is precedent across the state for ROEs to provide additional compensation to assistant regional superintendents for work outside their normal scope of work. He responded that a personnel file was created for her as a local employee and her time and effort sheet was kept on file in the ROE office.”
Another former employee was paid $50 per hour for 20 hours of bookkeeping and other services relating to the Supplemental Education Services program.
“This employee received $1,200 for these services, which was $200 more than the contract,” the audit states. “The Regional Office could not provide documentation to substantiate the additional amount of pay.”
Two employees were paid a total of $46,160 for summer work at Southern Thirty, however there was not documentation to support extra services or to determine if and when the work was performed. Another former employee received an additional $1,575 per pay in June 2011, for a total of $3,150 but there was no documentation to support the additional payments.
Another finding of the auditor general was there were not adequate controls over employee benefits and five employees were incorrectly classified as being in the Teachers Retirement System when they should have been in the Illinois Municipal Retirement Fund.
“This resulted in an overpayment to TRS of about $22,700 and an underpayment to IMRF of about $32,000,” the audit states. “Additionally, since Social Security taxes should have been withheld, and matched under IMRF for these employees, the ROE’s liability was approximately $21,000.”
Also, payroll testing auditors “noted variances” between wages recorded and those reported to TRS of about $142,000, resulting in an underpayment of the TRS and Teachers Health Insurance Security liability of about $16,000.
Vacation and sick time was also an issue for at least four former employees. Two employees each received payments of $1,360 for 10 unused vacation days each.
“However, one employee only had six unused vacation days available and the other had 5.5 unused vacation days available,” the audit states. “In addition, these payments were made from the vendor module of accounting software opposed to the payroll module and no payroll taxes were withheld. ... A former ROE employee exceeded the number of personal/sick leave days that were allotted to them. The employee had negative .5 days accumulated sick leave that carried over from the prior year. Ten sick days and two personal days were earned in the current year. The employee took a total of 18.5 sick/personal days, exceeding the accumulated leave by 11 days. A former ROE employee, who was classified as a half-time employee, was not entitled to paid sick/personal leave, however, the Regional Office accrued 10 sick days and two personal days for this employee in the current year. The employee took a total of 20 sick/personal half-days in the current year, exceeding the amount accumulated by 21 half days.”
Questionable expenditures included spending $1,702.84 for a computer from a math and science grant, which did not provide for capital expenditures.
“The Regional Office could not provide appropriate documentation to support the business purpose of payment of certain expenditures at the Southern Thirty program location,” the audit states. “Expenditures included, but were not limited to windows, HVAC, new flooring and gym equipment, all for a gymnasium located in a separate building, which, according to the program teacher and current Regional Superintendent, is not utilized by the ROE for program services under this agreement. ... The Southern Thirty facilities, including the rehabilitated gymnasium, are privately owned buildings.
“The Southern Thirty location provides for one teacher, one aide and a Department of Children and Family Services mediator,” the audit continues. “In addition to one full-time teacher and full-time aide, the ROE allocated salaries for nine other employees to the Southern Thirty program at various times from January through June 2011. Fiscal year 2010-2011 salaries and benefits expenditures for the Southern Thirty program totaled $126,281. By comparison, the 2009-2010 fiscal year salaries and benefits expenditures totaled $57,862. The reason for the more than 118 percent increase in salaries and benefits is not supported by appropriate documentation.”
Southern Thirty was not the only program which was singled out in the audit. The ROE was the service provider for the Supplemental Education Services program at District 80.
“The Regional Office of Education 25, as a service provider, used SES funds to purchase 10 computers for use in the SES program in fiscal year 2010-2011,” the audit states, and itemizes “questionable expenditures.”
“The Regional Office of Education 25, as a service provider, used SES funds to purchase 10 computers for use in the SES program,” the audit states. “The computers remained the property of ROE 25 employees working with the SES program once the program ended.
“According to time and effort sheets, the ROE paid tutors at the District 80 SES program, on average, $50 per hour. There were two instances of tutors receiving $60 per hour and one instance where a tutor received $30 per hour. By comparison, the other district SES programs paid tutors $30 to $35 per hour and a separate program paid tutors a rate of $15 per hour; therefore, it could not be determined whether the higher tutor rates were reasonable and necessary.”
In addition, a salary was paid to an employee who was not performing work for the ROE, the audit found.
“According to the employee, she was engaging in the student teaching portion of her teaching credential requirement between February and April 2011, but continued to receive her normal ROE salary,” the audit states. “The ROE could not provide a contract or policy that provides for this type of payment. The salary and benefits paid while not working at the ROE totaled approximately $10,000.”
Cross said the renovations at Southern Thirty had been discussed since 2008, and a major influx of funding in 2011 allowed the ROE to proceed with renovations. In regards to salaries for ROE, Cross said the program receives services from many of the people at the main office for bookkeeping, technology, reception, clerical, administration and all had a connection to the program. In regards to the employee who was paid while not working at the ROE, Cross told auditors that she was paid pursuant to his discretion and he understood that the employee prepared lesson plans for her classes at the ROE’s alternative school while student teaching at another school in the region.
The full audit and its findings is available for the public inspection at the ROE office on Broadway in Mt. Vernon.