State Auditor General Eugene DePasquale said the Brownsville Area School District “must improve its finances” after a performance audit found that the district’s general fund balance had decreased by more than 50% over a recent five-year period.
An audit spanning fiscal years 2013-14 to 2017-18 conducted by the auditor general’s office revealed Brownsville failed to apply financial best practices and comply with transparency and data reporting requirements on several transportation matters.
According to the audit report, released Thursday, a review of the district’s financial position over the period revealed the general fund balance to have decreased from $2.75 million on July 1, 2013, to a low of $156,254 on June 30, 2015, before increasing to $1.39 million as of June 30, 2018.
“School officials must better manage the district’s finances and reverse this downward trend to help ensure that students at Brownsville are getting the best education possible,” DePasquale said in a press release that accompanied the report. “The fact that during the course of this audit the fund balance dropped by more than half shows changes need to be made.”
The audit report states that a $1.39 million general fund balance, the most recent figure available, will meet less than one month of the district’s expenditures and is significantly less than the amount recommended by the Government Finance Officers Association, which suggests maintaining an amount equal to two months of regular general fund operating revenues.
The report said the general fund decline is concerning due to the district experiencing an increase in charter school costs and debt service payments during the audit period, costs that will continue to increase.
“Auditors found that the district relied on refunding bonds and selling a school building to keep a positive fund balance,” DePasquale said. “These options may not be available in the future so the district must find ways to increase efficiency.”
In response to the audit report’s claim that Brownsville’s fund balance had “deteriorated” during the audit period, business manager Bill Boucher said context is important.
Boucher said when he arrived at Brownsville in the third quarter of the 2014-15 fiscal year – the year the fund balance hit a low point – the district was in a financial downturn that he and the district have since worked to correct.
The district’s fund balance has increased each of the last four years by a cumulative total of $1.64 million, said Boucher.
Boucher said the years included in the audit prior to his arrival at Brownsville were marred by frivolous spending by the previous administration.
“I’ve worked steadily for the last four years – with an increase each year (in the fund balance),” Boucher said. “The auditor general says Brownsville better watch. Brownsville has been watching. It takes time.”
The report recommended Brownsville prepare a multiyear budget that includes a strategy to increase revenue and/or reduce expenditures to achieve an operating surplus and increase its general fund balance, and to display the budget on the district website.
The report indicated that the district agreed to prepare such a budget that included strategic plans to pursue alternative cybercharter tuition, attrition and reduction at all staff levels, bond refinancing and gas leases.
Boucher said he is preparing a five-year budget for the district.
The audit also found a number of deficiencies related to district performance in the areas of transportation operations, bus driver requirements and student data reporting.
According to the report, the district violated the Sunshine Act in July 2016 when the board failed to solicit bids for a transportation contract. The report states that a former superintendent transferred an existing contract to another company that had purchased the contracted company without board approval. Dr. Philip Savini was superintendent in 2016.
In a response to the auditor general, the district indicated it has since deemed the contract invalid and will negotiate and enter into a new agreement with the vendor, Mlaker Transportation.
Boucher said the board approved a new contract from Mlaker at its most recent meeting, fulfilling the audit finding and recommendation.
The audit report also states the district failed to ensure its contracted bus drivers were qualified and cleared to transport students during the 2018-19 school year.
According to the report, the district did not ensure that all bus drivers had the required qualifications and criminal history clearances before they transported students at the beginning of that school year.
In November 2018, a review of the district’s driver records showed incomplete records for 23 of 47 (49%) drivers, with some drivers’ files having more than one deficiency in documentation.
Additionally, the district inaccurately reported transportation costs for the 2015-16 school year and the number of nonpublic school students transported during a four-year period from 2013-2017, resulting in the district receiving a net overpayment of $82,340 from the state Department of Education.
Brownville also failed to accurately report nonresident student data to PDE for three separate school years, resulting in an overpayment to the district of $29,790.
According to the auditor general, the district agreed with the audit’s five findings and is working to implement 21 recommendations for improvement.
The Brownsville Area School District audit report is available online at www.paauditor.gov.