Improper Spending of 2009 Bond Issue Likely to Set School District Back Further

BRADENTON – While the superintendent's contract dominated Tuesday's marathon school board meeting, the district received much bigger news in an update provided by its internal audit firm, Shinn & Co. LCC of Bradenton. It appears that $6.4 million of a 2009 bond issue cannot be properly accounted for and may have been inappropriately spent when it was transferred to accounts not associated with the expenditures authorized in the bond offering.

The $42.5 million bond issue was to fund an addition at Palmetto High, work at Rogers Garden Elementary and the modernization of the district's transportation and maintenance facility. Only $38.8 million of that money could be properly accounted for. Consultants from a Tampa-based firm working with Shinn & Co. on the audit emphasized that the money did not appear to have been stolen or embezzled, but may have been deposited into other accounts and spent on district expenses that were not eligible for funds from the bonds.

In the report, Steven Oscher of Oscher Consulting P.A., says that there appears to have been unauthorized transactions involving transfers from the fund established for the issue. The money was moved to fund projects at the Manatee Technical Institute and at Myakka Elementary School, while some was used to service other debt. They are still looking for documentation that would explain how and when the money was moved and who authorized it.

The transfers occurred under Tim McGonegal, Manatee School District's superintendent who resigned in September of 2012, after acknowledging that what he and his team had reported as a multimillion dollar budget surplus, had been misstated by millions of dollars, leaving the district in a large shortfall instead.

The current bond problems would be the latest in a string of additional multimillion dollar errors incurred under McGonegal's watch that were only discovered after his departure. A recent audit of state and federal funds led to the district having to restore $7.2 million in past funding that was inappropriately spent, dating back to 2005 (some of which occurred under Superintendent Roger Dearing, while McGonegal was the district's finance director). Much of that money had to do with the improper expenditure of ESE monies.

Current Superintendent Rick Mills was brought on in March of last year. He has since replaced virtually the entire top tier of the district administration. His team has executed a turnaround of over $16 million, while raising standardized test scores in each category released so far this year. The district has its first positive fund balance in four years, but remains around $9 million behind the state's required reserve, thanks largely to the recent restoration the district was hit with.

The administration says it is impossible to know how the bond issue will impact the 2014-15 budget it is currently working on and will have to wait until they learn more from the audit committee and receive their recommendations before they'll have a better handle on the impact of the errors.