LEECHBURG — The Leechburg Area School District has about $400,000 less in the bank than expected, according to an audit, and officials are trying to figure out why.
Officials said they don't know whether money is missing or there was a significant accounting error.
“We just don't know, at this point,” school board President Terry Knepshield said at Wednesday's board meeting.
An independent audit has revealed a budget shortfall at the end of the 2005-06 fiscal year of about $400,000.
The audit, conducted by Jeffrey McVey & Associates, will officially be presented at the board's next meeting, the officials said.
District officials provided the Valley News Dispatch with a copy of the audit, which Jeffrey McVey said was a standard annual audit.
According to the audit, the problem stems in part from work done by former Business Manager Gary Shepler.
Shepler, who resigned last November, is identified in the audit by title only.
The audit states, “The Business Administrator did not follow established policies and procedures for the review of monthly accounting transactions and activity, and reconciliation of monthly transactions with underlying journals and supporting documentation.”
The result of this, according to the audit, was that the district's account balances and financial records were inaccurate.
Also noted in the audit is that the district budgeted about $11.1 million in expenses for the last fiscal year and spent about $11.5 million.
The exact shortfall was $392,902, according to the audit.
The problem occurred because the district approved a transfer of $500,000 in July 2005, according to the audit document. The shortfall equates to roughly 5 mills.
The money was transferred from the unreserved fund balance to the capital improvement fund, according to the audit.
“The fund transfer was not budgeted as an expenditure in the fiscal year 05-06 general fund budget,” the audit states.
Contacted Thursday night, Shepler was asked if he recalled any of that information from the audit, and if he agreed or disagreed with it.
“I have not seen the audit, so I really don't know because I have not been in there since August,” Shepler said.
He said he probably will request a copy of the audit from the school district.
Asked if he knew of any problem with a shortfall in district funds when he resigned, Shepler replied, “Again, I would have not comment. I'll probably wait until I see the audit.”
Also, Shepler declined to comment on the reason for his resignation, which was never publicly stated by the school board.
“That's between me and the district,” he said.
It was unclear what effect the missing money might have on next year's budget, specifically if it would result in a tax increase.
Superintendent James Budzilek, Cinpinski and Knepshield could not be reached for further comment on Thursday.
The district has taken steps to increase its cash flow. The board on Wednesday agreed to contract with an Erie-based firm that will collect delinquent tax bills on the district's behalf.
District officials said the firm will advance the district the amount of money owed from delinquencies that are a few years old for the right to collect the outstanding money.
Solicitor Robert Cinpinski said the one-time payment could amount to about $400,000.
Rick Liberto, the district's new business manager, said the agreement with Municipal Revenue Services will come at no cost to the district.
McVey said on Wednesday that he planned to present the findings that night during the board's executive session. He wouldn't discuss the audit in public.
The presentation behind closed doors didn't happen on Wednesday, however, because of a time constraint on McVey's part, according to Cinpinski.
McVey will make his presentation publicly in two weeks, Cinpinski said.
Last November, Budzilek acknowledged that rumors were rampant that the district was in a financial mess. When asked Nov. 15 if the district was running a deficit or was in financial trouble, Budzilek said, “No.”
The fiscal problem, while serious, is not as dire as has been made out in widespread rumors that put the shortfall at five times as much, officials said Wednesday.
Budzilek said that a recent rumor being floated is that the district is bankrupt is not close to being accurate, but said there is a lesser problem.
The officials said the district had, at the beginning of the current school year, a fund balance of about $1.2 million. However, officials said the school board expected that balance to be closer to $1.3 million.
Michael Aubele can be reached at maubele@tribweb.com. Tom Yerace can be reached at tyerace@tribweb.com.
