FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
INSUFFICIENT CONTROLS OVER PAY RATE
AUTHORIZATIONS AND EMPLOYEE EVALUATIONS
The Regional Office of Education #21 made
seven non-routine/bonus payments from July through December 2005 which
totaled $11,200. There were six $1,000
payments made to the Program Director of several of the ROE grants. The other payment for $5,200 was made to a faculty
member for Project ECHO (Alternative School).
While these payments were supported by a signed Payroll Authorization
form, no explanation was provided for the employees’ pay increases.
In addition, the former Regional
Superintendent and former Assistant Regional Superintendent did not complete
employee evaluations. Program
directors completed self-evaluations; however, these were simply signed by
the former Assistant Regional Superintendent and placed in the employee’s
personnel files. ROE personnel
indicated that no evaluations were given to them, formally discussed with
them, or signed by them. (Finding
06-01, pages 13-15) This finding
was first reported in 2002.
The ROE agreed with the finding and
stated that bonus payments are no longer made and that all employees have a
contract which specifies work assignment, compensation, and duration of
assignment. A salary schedule has been
implemented for all teaching faculty which covers faculty at ECHO, Detention
Center, and Star Quest. Every job has been reviewed by the
administration. New job descriptions
have been completed on every position and they have been signed by both the
employee and administration. Salaries
have been adjusted, up and down, in many cases to reflect appropriate
compensation for respective job assignments.
Appropriate documentation is now maintained in personnel records
relative to job assignment and salary.
Any work performed by employees which is above and beyond the basic
contract is now specified in a supplemental contract which specifically
outlines the additional duties and compensation.
In addition, ROE officials stated that
every employee has been formally evaluated by appropriate staff and the
evaluations have been signed by the supervisor and employee and are on file
with personnel records. New personnel
policies have been adopted. Earned vacation
and sick leave days have been determined for every employee. (For previous
Regional Office response, see Digest Footnote #1.)
UNALLOWABLE EXPENDITURES
The former Regional Superintendent
submitted travel vouchers for mileage and meal expenses for himself and other
employees that were reimbursed by the ROE that have been alleged to be
materially false in indictments released on August 19, 2004. The former Regional Superintendent and
three ROE employees were indicted for allegations ranging from theft and
forgery to official misconduct, conspiracy, and/or perjury. As of June 30, 2006, one of the four cases
had been settled; legal proceedings related to the remaining three
indictments were still continuing.
The former Regional Superintendent reimbursed the ROE $2,625.70 for some
personal expenditures incurred.
However, it is unclear which specific charges were being
reimbursed or whether any of these reimbursements related to matters that
were the subject of the indictments. (Finding
06-02, pages 16-17) This finding
was first reported in 2002.
The auditors recommended that the
Regional Office establish and follow a policy that prohibits personal
expenditures from being paid with ROE funds.
Internal controls should be established to ensure that personal
expenses are not paid by the Regional Office.
The auditors also recommended that the former Regional Superintendent
reimburse the ROE for all personal expenses paid by the ROE that have not
already been reimbursed.
The Regional Office agreed with the
finding and stated that personnel and financial policies have been revised to
prevent future payment of personal expenditures. Internal controls have now been established
which require appropriate documentation, supportive documents, and proper
authorization forms before payment can be made. Requests for payment are now reviewed by
the appropriate program director, bookkeeping, and the superintendent before
a check is issued. These new
procedures have been reviewed at Director’s meetings on several occasions to
insure that all staff are aware and familiar with the new procedures. (For previous Regional Office response, see
Digest Footnote #2.)
LACK OF INTERNAL CONTROLS OVER PAYROLL
The
former Regional Superintendent’s wife, a former ROE employee, received
compensation for 124 days in which she was absent from work and there was no documentation
that services were performed.
Additionally, the employee had no vacation or sick time earned or
accumulated. Regional Office officials
indicated that the Superintendent’s wife was not on any authorized paid
leave. The total amount paid to the
employee during this period was $25,411.
Sound business practice requires
that employees only be compensated for services provided and/or accumulated
and available sick and vacation time. (Finding
06-03, page 18)
The Regional Office agreed with the
finding and stated that under the new administration, this employee no longer
works at the ROE. Also, under new
policies and procedures which have been established, this situation cannot
occur in the future. Regional Office
officials noted that this has been forwarded to the Attorney General’s Office
and the States Attorney’s Office for consideration of recovery of these
funds.
UNALLOWABLE CELL PHONE CHARGES
The former Regional Superintendent
submitted monthly cell phone bills which included a number of questionable
expenditures. These questionable
expenditures included service fees for phone lines not used by ROE employees
for 2 ½ months, ring-tone download charges (4 instances), multimedia packages
(24 instances), and late fees (4 instances).
The questionable cell phone expenditures during FY06 totaled $383.12.
Cell phone charges should only be reimbursed
for legitimate business activities incurred by ROE employees. (Finding 06-04, page 19)
The
Regional Office agreed with the finding and stated that policies and
procedures have now been implemented which prevent this situation from
occurring in the future. Cell phones
which were being used for questionable purposes were taken out of service
immediately by the new administration.
Regional Office officials also noted that this recommendation has been
forwarded to the Attorney General’s Office and the States Attorney’s Office
for consideration of recovery of these funds.
IMPROPER ALLOCATION OF COSTS
The Regional Office of Education #21 has
not implemented a cost allocation
plan or an approved indirect cost rate to allocate indirect costs in
accordance with OMB Circular A-87. The
ROE invoices the various grants and programs it administers for central
service activities, including support salaries and related benefits,
accounting and secretarial services, and space rent based on the grants’
budgeted costs (rather than as part of a Cost Allocation Plan). Such salaries and benefits are allowable
expenditures under OMB Circular A-87; however, where employees work on
multiple activities or cost objectives, a distribution of their salaries or
wages is required to be documented in accordance with the provisions of OMB
Circular A-87 or be included in the ROE’s cost allocation plan.
Grants, cost reimbursement
contracts, and other agreements with the Federal Government should bear their
fair share of costs recognized under principles established by the Office of
Management and Budget. (Finding 06-05,
pages 20-21) This finding was
first reported in 2000.
The
Regional Office agreed with the finding and stated that the Regional Office
now has a cost allocation plan which will enable the proper allocation of
costs to grant funding sources. This
cost allocation plan outlines the methods to be used to allocate both direct
and indirect costs to grants. This
cost allocation plan will be applied to federal and State grants, as well as
any other grants for which costs must be allocated. Employees whose salaries are paid from
multiple funding sources are required to complete time sheets. Costs are determined and allocated based on
formulas which ensure that only the actual cost of grant operation is charged
to the grant. The condition of grants
being excessively charged has stopped.
The ROE has also received an approved indirect cost rate from the
Illinois State Board of Education. (For previous Regional Office response, see
Digest Footnote #3.)
CONTROLS OVER
COMPLIANCE WITH LAWS AND REGULATIONS
The Illinois School Code (105 ILCS
5/3-14.11) requires the Regional Superintendent to examine at least once each
year all books, accounts, and vouchers of every school treasurer in the
educational service region, and if any irregularities are found in them, to
report them at once, as directed by the School Code.
The Regional Office did not examine at
least once each year all books, accounts, and vouchers of every school
treasurer in the educational service region.
Regional Office officials noted they believe the mandate is outdated
and that they are satisfying the intent of the statute by other reviews they
undertake. For example, the Regional
Superintendent reviews and signs off on the Annual Financial Reports from the
school districts in the region. This
mandate has existed in its current form since at least 1953.
The Illinois School Code (105 ILCS 5/3-14.25) requires the Regional
Office of Education to maintain, and make available to the public during
regular business hours, a list of unfilled teaching positions within the region. The most current version of the list must
be posted on or linked to the Regional Office of Education’s Internet
website. If the Regional Office does
not have an Internet website, the Regional Superintendent of Schools must
make the list available to the State Board of Education and the State Board
of
Education must post the list on its
Internet website.
The Regional Office of Education #21
did not maintain, and make available to the public during regular business
hours, a list of unfilled teaching positions in the region. In addition, the Regional Office did not
provide a listing on its website of all such unfilled teaching positions.
The Illinois School Code (105 ILCS
5/3-5) requires the Regional Superintendent to present under oath or affirmation
to the county board at its meeting in September and as nearly quarterly
thereafter as it may have regular or special meetings, a report of all acts
as county superintendent, including a list of all the schools visited with
the dates of visitation. This mandate
has existed in its current form since at least 1953.
The Regional Office did not present
at the September county board meeting, and as nearly quarterly thereafter, a
report of all its acts including a list of all the schools visited and dates
of visitation.
The Illinois School Code (105 ILCS
5/3-14.5) requires the Regional Superintendent to visit each public school in
the county at least once a year, noting the methods of instruction, the
branches taught, the textbooks used, and the discipline, government and
general condition of the schools. This
mandate has existed in its current form since at least 1953.
The Regional Office performs
compliance inspections for each public school in the region on a rotational
basis every three years instead of annually.
The Illinois Public School Accreditation Process Compliance Component
document completed at these visits includes many of the items delineated in
105 ILCS 5/3-14.5, but does not include a review of the methods of instruction
and the textbooks used in the district.
The Illinois School Code (105 ILCS
5/3-7) states that each school district shall, as of June 30 each year, cause
an audit to be made of its accounts.
Each school district shall on or before October 15 of each year,
submit an original and one copy of such audit to the Regional
Superintendent. If any school district
fails to supply a copy of such audit report on or before October 15, or
within such time extended by the Regional Superintendent from that date, not
to exceed 60 days, then it shall be the responsibility of the Regional
Superintendent to cause such audit to be made.
The Regional Office of Education #21 was unable to supply evidence that
2 of the 16 school district financial statement audit reports were submitted
to the ROE by October 15, 2005 or by the extension date. One school district’s financial statement
audit report was submitted 71 days after the allowable extension date granted
of November 30, 2005. The remaining school
district’s financial statement audit report had not been submitted as of
October 13, 2006.
The Illinois School Code (105 ILCS
5/13B-25.35) states that based on district plans to provide alternative
learning opportunities, the Regional Office of Education must submit an
annual plan summarizing the number, needs, and demographics of students at
risk of academic failure expected to be served in its region. This plan must
be updated annually and be submitted to the State Board.
The Regional Office of Education #21
did not provide the ISBE with an annual Regional Plan summarizing the number,
needs, and demographics of students at risk of academic failure expected to
be served in its region, even though school districts within the Regional
Office’s region participated in an Alternative Learning Opportunities
Program.
The Illinois School Code (105 ILCS
5/3-14.17) requires the Regional Superintendent to notify the presidents of
the board of trustees and the clerks and secretaries of school districts, on
or before September 30, annually, of the amount of money distributed to the
treasurer, with the date of distribution.
The Regional Office did not notify
the board of trustees and the clerks and secretaries of school districts, on
or before September 30, annually, of the amounts of money distributed to the
school treasurer, with the date of distribution. (Finding 06-06, pages 22-28)
The Regional Office accepted the
recommendation to comply with the statutory requirements. The Regional Office responded that with
regards to compliance with 105 ILCS 5/3-14.11 and 105 ILCS 5/3-14.5, the
Illinois Association of Regional Superintendents of Schools and the Illinois
State Board of Education have agreed to seek legislation to remove
duplicative and/or obsolete sections of the Illinois School Code. Both parties believe that 105 ILCS 5/3-7 of
the Illinois School Code and 23 Ill. Adm. Code 1.20, respectively, contain
more current, thorough, and comprehensive requirements concerning a public
school district’s financial transactions and visitation of public schools by
the Regional Superintendent. As a
result, the two parties working together will seek legislation to repeal
these two sections of the Illinois School Code.
With regards to 105 ILCS 5/3-14.25,
the Regional Office stated there is now a link on the ROE website that lists
any unfilled teaching positions.
With regards to 105 ILCS 5/3-5, the Regional Office stated that there
is an ongoing effort to attend meetings more frequently and provide reports
to the members of each county board.
With regards to 105 ILCS 5/3-7, the Regional Office stated that
monitoring for FY 07 has included maintaining a log evidencing the receipt of
the financial statements from the school districts and communication with
districts not in compliance.
With regards to 105 ILCS 5/13B-25.35, the Regional Office stated that the
current superintendent plans to develop and submit a plan to provide
alternative learning opportunities for students at risk of academic failure
in the school year 06-07.
With regards to 105 ILCS 5/3-14.17,
the Regional Office agreed that the requirement to notify the board of
trustees and the clerks and secretaries of school districts on or before
September 30, 2005 was not completed.
The Regional Office stated this requirement was fulfilled for
September 2006.
LACK OF AND/OR
INCONSISTENCIES IN PAYMENT AUTHORIZATIONS
The ROE made the following questionable
reimbursements totaling $658.43 during FY 06:
·
The former Regional Superintendent received a
$30 refund for a hotel stay that was paid for by the ROE and never remitted
the refund to the ROE.
·
Two employees were reimbursed a total of $263.20
for mileage when an “Authorization for Payment” form was not attached or
signed by the former Regional Superintendent.
·
The former Regional Superintendent was
reimbursed $146.25 for mileage to and from
Springfield, IL
to renew the Driver’s Education car’s license sticker at a Secretary of State
facility. The former Regional
Superintendent did not submit any additional documentation to indicate that
he was traveling to Springfield,
IL for any other reason during
this time period. This service is
provided at other locations near the ROE.
·
An employee was reimbursed for the same meals
twice. In two instances, the employee
submitted reimbursement for a meal that was charged to the employee’s hotel
room which also was subsequently reimbursed by the ROE. The dollar amount of these over-reimbursements
was $64.98.
·
An employee was reimbursed for the same hotel
stay twice. The total dollar amount of
the over-reimbursement was $154.
The
ROE should adequately review employee claims for reimbursement and reimburse
employees only for expenses that are supported by a legitimate business
purpose and/or proper documentation in accordance with ROE’s Policies and
Procedures Manual. (Finding 06-07, pages
29-30)
The Regional Office agreed with the
finding and stated that internal controls have been strengthened to prevent
inadvertent errors in payment.
Policies and procedures now require proper authorization for payment
be adequately prepared and presented before payment is made. The Policy Handbook is being amended to
include a section specific to reimbursement of meal expense. Current employees who were over reimbursed
as a result of inadvertent errors on travel vouchers will be asked to
reimburse the ROE in the amount of the overpayment.
FAILURE TO ALLOCATE
INTEREST EARNED
The Regional Office of Education
#21 did not allocate interest earned from its commingled bank account to each
source of funds.
The Regional Office of Education
Accounting Manual states that if dollars from two or more sources
of funds are combined in one bank account and/or fund, the ROE must allocate,
no less than monthly, a portion of the interest earned on that bank account
or fund to each source of funds. (Finding
06-08, pages 31-33)
The Regional Office agreed with the
finding and stated that an Interest Allocation Plan has been developed which
ensures that interest earned from grant funds will be allocated back to the
grant source and used as part of the program as approved in the original
grant agreement. This allocation will
be made monthly with a report going to the Superintendent and Program
Director which will help ensure proper utilization.
ROE EMPLOYEE RECEIVED OUTSIDE COMPENSATION
A full-time ROE employee received
two payments totaling $450 from a school district within the counties served
by the ROE. The payments were for
training sessions normally performed within the employee’s scope of
employment with the ROE. There was no
documentation showing that the services performed were approved by the
Regional Superintendent.
According to the ROE Policies and
Procedures Manual, employees of the ROE are prohibited from having
conflicting employment while employed in a full-time ROE position. In addition, if a full-time employee
performs outside services or employment, such services or employment must be
reported to the Program Director and/or Superintendent. (Finding 06-09, page 34)
The Regional Office agreed with the
finding and stated that ROE policies have been extensively revised. A new Policy Handbook has been distributed
to all employees. A general staff
meeting was held to give employees an opportunity to have any policy
clarified. The Policy Handbook has
been discussed at several ROE Director’s meetings where additional
clarification has been given. All
employees have now been informed of this policy. Future violation should not occur. School district superintendents and
bookkeepers within Franklin and Williamson
County will be notified that no
payment should be made to ROE employees.
AUDITORS’ OPINION
Our auditors state the Regional Office of
Education #21’s financial statements
as of June 30, 2006 are fairly stated in all material respects. The auditors’
report contains an emphasis of matter paragraph due to contingent liabilities
created by possible violation of restrictive provisions of grants.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL
ASSISTANT AUDITORS
Our special assistant auditors were Sikich,
LLP.
DIGEST FOOTNOTES
#1: LACK OF PAY RATE
AUTHORIZATIONS AND EMPLOYEE EVALUATIONS – Previous
Regional Office Response
In
its prior response in 2005, the Regional Office responded that the payments
were for extra duties performed such as substitute teaching, extra work over
the summer for 9.5 month employees and salary payments for employees who
worked Project ECHO’s 4-week summer school course. The ROE indicated they could not avoid
non-routine payments due to the unavoidable situations that cause the
non-routine payments; however they would provide better explanations and
documentation for the payments.
#2: UNALLOWABLE
EXPENDITURES– Previous Regional Office Response
In
its prior response in 2005, the ROE responded that it is the ROE’s policy
that personal expenses are paid by the employee, not the ROE, and that
internal controls have been established to ensure the Regional Office does
not pay personal expenses. The ROE
response also included a response from the former Regional Superintendent: “I
object to the findings on the cell phone usage and meal and mileage
compensation. These findings are inaccurate and not based on actual
facts.” Auditors commented that the former
Regional Superintendent did not provide any documentation to support his
claims.
#3: IMPROPER ALLOCATION OF COSTS – Previous Regional
Office Response
In
its prior response in 2005, the Regional Office responded that a cost
allocation plan has not been developed that addresses the distribution of
salaries of employees who work on multiple activities.
Complete Regional Office responses to prior findings are
available upon request from the Auditor General’s Office.
|
