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Baldwin-Whitehall school leaders get ‘failing grade’ in state audit for fiscal practices

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Nate Smallwood | Trib Total Media
Pennsylvania Auditor General Eugene DePasquale.

Financial mismanagement and high turnover at the Baldwin-Whitehall School District could be hurting academic performance, Pennsylvania Auditor General Eugene DePasquale said Monday.

“Students and teachers probably succeed in spite of the administration,” he said. “The kids are outperforming the administration, by leaps and bounds.”

In an audit report released Monday, DePasquale wrote that the district’s lack of record-keeping from 2010 to 2014 left procurement credit cards vulnerable to abuse and could lead to the state seeking repayment of more than $343,000 in tuition for foster children placed in the district.

The administration has cycled through two superintendents, four business managers and seven treasurers since July 2008.

“They probably should be doing even better than they are academically, but we’ve seen this over and over again,” DePasquale said. “When school districts have high turnover in their administration, when you have these misspent funds … that is a sign the administration is not as disciplined as they should’ve been.”

Superintendent Randal Lutz and school board president Ray Rosing did not return calls seeking comment.

DePasquale questioned why the district‘s fund balance, which he said is about $10 million, went untouched as the school board narrowly passed a $61.3 million budget that increased the property tax rate by 0.81 mills to 18.42 mills June 17.

“They could’ve covered the whole tax increase and still had 10 percent of their budget reserves left for the next fiscal year, and they didn’t touch it,” DePasquale said in an interview with Tribune-Review editors and reporters.

A $1.9 million deficit in that budget could grow if the state Department of Education follows up on DePasquale’s recommendation to make Baldwin-Whitehall repay $343,061 it received in the form of tuition payments for non-resident students placed in foster homes or institutions in the district. DePasquale said the district didn’t properly document the statuses of those children.

The district’s response, included in the audit, said staff disagreed with this finding, noting that 28 non-resident students during the review period had documentation showing they were in the district legally. Some had failed to change their status from non-resident to resident when they were adopted.

According to the audit, the district held four “procurement” credit accounts with spending limits of $10,000 to $500,000, but didn’t keep records of who was authorized to use those credit cards. The district didn’t document who approved all purchases, explain how purchases met a district need or keep detailed receipts of every purchase.

There were $45,000 worth of purchases that weren’t properly documented, according to the audit.

“When you’re spending taxpayer money, there should at least be a receipt,” DePasquale said.

DePasquale’s office lacks the authority to obtain records from financial institutions.

District officials wrote that they eliminated all but three of the credit cards, and would review procedures or eliminate the remaining cards.

Auditors found the district failed to adopt policies recommended in previous audits, including one done after an employee embezzled nearly $300,000 in district funds.

“It is particularly disturbing that nearly six years have passed since the independent forensic audit and Baldwin-Whitehall School District has not put proper policies and procedures in place to prevent another case of fund embezzlement,” DePasquale wrote.

DePasquale said the district violated the Public School Code by letting school board member Martin Michael Schmotzer resign his board seat and immediately take a paid position in the district administration in November 2013 for $120,000 a year. He resigned that job amid public outcry weeks later only to rejoin the board, having won re-election.DePasquale said his office will give the district at least a year to follow up on the recommendations before returning for the next audit.

Melissa Daniels is a staff writer for Trib Total Media. She can be reached at [email protected] or 412-380- 8511. Staff writer Matthew Santoni contributed to this report.

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