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Auditor: Chesapeake schools mishandled #036;270,000

CHESAPEAKE — In a recent audit report from State Auditor Mary Taylor, Chesapeake Union Exempted Village School District had nearly $270,000 in questionable spending of federal grant funds. According to the report, out of that amount the district owes the Ohio Department of Education more than $56,000.

“These are what we call questioned costs,” said Steve Faulkner, deputy press secretary in the Ohio auditor’s office. “Questioned costs are federal grant funds that are spent either outside of the allotted time frame that the district is given or they are spent on items not allowable under the grant guidelines. This could adversely affect future federal funding.”

John W. Hayes, interim superintendent of the Chesapeake district, said the questioned costs were not in purchases made by the district but in the salaries that were paid.

“We should have paid them out of the fiscal year 2005, but instead we started to take it out in the fiscal year 2006 program,” he said. “It should have still come out of that program until September 2006.”

The salaries amount to more than $200,000 and the $56,000 was a result of a software glitch in the state’s accounting system, Hayes said.

“It’s strictly a timing problem,” he said. “We were paying them out of one fiscal year and they should have been paid out of the previous year.”

Auditors recommend that district officials reimburse ODE $56,289.96 for paying twice as much as they should have for employer contributions to the State Teachers Retirement System and the State Employees Retirement System.

The grant guidelines can allow employer contributions of retirement funds up to 14 percent and the school district was paying 28 percent, Faulkner said.

The audit also found weaknesses in the management of federal funds, including:

Differences in the amount spent on some purchases compared to the amount recorded on the books.

Improperly carrying certain federal grant fund balances over to subsequent spending periods.

Not providing proper documentation for corrections made to federal grant funds.

Federal grant dollars are usually specific on how the funds must be spent and the time period of the grant. Most of the time, if there is a balance in the federal fund, it cannot be carried over to the next spending period.

“The district officials have taken steps to ensure that these same issues don’t occur in future audits,” Faulkner said. “District officials really need to implement policies and procedures to enhance the management of federal funds in order to prevent the loss of future federal funding.”

District officials acknowledge that errors in their accounting system are to blame for many of the findings made in the audit report. They also say they have taken steps to prevent similar issues from occurring in the future.

“They were all allowable expenses,” Hayes said. “We don’t have to pay anything back. It was never questionable, and they are not asking that we correct that. They just asked if we correct our accounting procedure.”