This story has been updated.

DeKalb County, GA — A recently released state audit of DeKalb County Schools includes numerous findings, some of which pertain to how the district spent its federal COVID-19 relief money.

To see the full audit, click here. This year’s audit findings start on page 84 of the PDF.

A spokesperson for the district outlined how DeKalb Schools plans to respond to the findings.

“The DeKalb County School District (DCSD) appreciates the state auditors’ hard work, dedication, and collaboration in putting together this year’s report, which provides valuable information for the District.  “Our professional DCSD finance staff is fully aware and deeply committed to the importance of robust transparency and accountability in responsibly managing our revenue and expenditures. Without question, our duty remains hyper-focused on maximizing our efficiencies as we serve the best interests of our staff, families, and community partners.”

The audit is for Fiscal Year 2022, which ended June 30, 2022. Former superintendent Cheryl Watson Harris would’ve been superintendent for most of that year, but Vasanne Tinsley was interim superintendent for May and June. Some of the issues the auditor raised predate Watson-Harris. Stability has not been a hallmark of DeKalb County Schools, with the district seeing numerous leadership changes. The district has had six superintendents since 2013. The school board will hold its first meeting with new Superintendent Devon Horton on July 10.

The audit uncovered numerous items labeled “significant deficiency,” meaning they are items “important enough to merit attention by those charged with governance.” Several of those findings pertain to how the district spent COVID-19 relief money.

Decaturish recently asked the district how much COVID-19 relief money it has received and spent, known as Elementary and Secondary School Emergency Relief (ESSER) funds. The district responded that information would require a records request, without specifying what records needed to be requested. In response to the request, the district provided a spreadsheet with information about its COVID-19 relief money. The district reported receiving $486.5 million in relief money and spending $264 million, leaving a balance of $194.2 million. The school district has until September 2024 to spend that money, according to former interim superintendent Vasanne Tinsley.

The auditor said the questioned costs for relief spending could be almost $1 million.

“Upon testing a sample of $2,037,733.28 in nonpersonal services expenditures, known questioned costs of $14,710.00 were identified,” the auditor wrote. “Using the total nonpersonal services expenditure population of $47,278,482.26, we project the likely questioned costs to be approximately $798,116.60. In addition, known questioned costs identified for improper payments associated with individually significant items tested totaled $48,037.69; therefore, the known and likely questioned costs identified for all unallowable payments throughout the sample and individually significant items tested totaled $62,747.69 and $846,154.29, respectively.”

The school district agreed with the finding and cited “inadequate staffing levels” for creating the problem.

The auditor found another $559,000 in questioned costs related to ESSER funds.

“A review of the School District’s accounting records and supporting documentation revealed that costs associated with capitalizable equipment, payments to charter schools, and rental costs were not appropriately deducted in the calculation of the net expenditures to which the approved unrestricted indirect cost rate was applied,” the auditor found. “Therefore, the School District claimed an additional $559,442.53 in indirect costs beyond the maximum indirect cost amount allowed. … Known questioned costs of $559,442.53 were identified for excess indirect cost expenditures claimed.”

The district told the auditor that “Inadequate controls” caused the problem.

There were also several findings not related to relief money spending. In 2019, the district began replacing its legacy HR/payroll system with a new system, but the auditor found that the district was still using both systems simultaneously.

“Three years after the conversion project began, the School District continued to operate its legacy system while running its new financial system,” the auditor found. “Continued delays in finalizing the legacy financial and HR/payroll systems conversion to the new financial system increases the cost and complexity of operations and creates ongoing risks to data integrity and a potential for significant financial misclassification and/or omissions …”

The failure to fully convert over to the new system resulted in redundant licensing fees for both applications, an increase in IT staff workload, loss of vendor detail information as the result of transfers between systems, and a risk of duplicate transactions.

“In addition, there is a lack of segregation of duties in both the financial data entry and the data transfer processes,” the auditor found. “One individual is heavily involved in data preparation and data entry combined with executing all data transfer tasks including data extraction from legacy accounting, data manipulation/formatting in Excel, then data import to the new financial system and reconciliation of the transfer.”

The auditor’s report said the issue was caused by “inadequate project management.”

“The School District lacked sufficient communication between management, project staff, IT staff, HR staff and accounting staff to consider the impacts of extending the use of the legacy system while operating the new financial system simultaneously,” the auditor wrote. “There was no detailed project plan or timely course correction when the new financial system implementation target dates were missed.”

The auditor also noted that the district “did not have adequate general controls in operation to protect the integrity, availability and confidentiality of information maintained in significant financial applications,” but declined to elaborate in the report, citing the sensitivity of the data being discussed.

The auditor found other deficiencies. Among the findings:

— One employee was paid for extra work in which documentation could not be provided to support the amount, resulting in an overpayment of $4,067.76.

— One employee was not paid for extra work, resulting in an underpayment of $380.85.

— Documentation to support that the payroll and benefit charges to Education Special Purpose Local Option Sales Tax (ESPLOST) were appropriate based on actual hours worked and could not be provided for four employees, resulting in a projected overstatement of $1,062,250.20.

— One employee received a $10,000 doctoral degree supplement for executive positions, but the employee did not hold a doctoral degree.

— The School District did not have a formal policy in place for awarding or approving supplements. A supplement request form must be completed and approved, but there was no policy in place to prevent an employee in a leadership role from completing and approving a form for employees who work under them.

— Seven employees accrued more than the maximum allowed 320 hours of vacation leave at year-end.

— According to the audit, 214 employees had negative accrued hours at year-end because they were allowed to use more hours than they had earned.

— Nine employees were overpaid a total of $15,845.76 for accruing more than the maximum allowed 400 hours of vacation leave.

“In discussing these deficiencies with the School District, they stated that these issues result from a lack of managerial oversight within the Human Resources and Payroll Departments as well as the failure to maintain and produce documentation to support compensation paid to employees,” the auditor wrote.

Following the publication of this story, a spokesperson for the district responded to several points raised in the audit. Here’s what the spokesperson had to say:

Regarding the ERP conversion:

— DCSD has hired a dedicated project manager to oversee the implementation. While there is not currently a “go-live” date, the team meets several times a week and is making steady progress.

Regarding internal controls and staffing levels:

— The district is developing corrective actions to strengthen internal controls, policies, and procedures and ensure adherence through improved monitoring.

— In fact, the ESSER grant management staff has expanded since the inception of the grant period to oversee the proper funding administration.

— Internal controls were noted and addressed throughout the FY 22-23 school year, and the District continues to strengthen its internal controls, policies, and procedures as appropriate.

— DCSD has adjusted its processes and provided additional training to staff to ensure compliance with all federal programs. Accordingly, the District consistently reviews the procedures for monitoring the documentation of expenditures. Training in these areas continues for all ESSER fund users on program implementation, budgets, use of funds, and prior approval requirements that align with federal compliance requirements. ESSER grant management staff will be included in all ESSER-funded expenditure review and approval processes.

Regarding additional measures implemented by DCSD: 

— As noted previously, DCSD has been determined in developing and implementing corrective actions to strengthen Finance internal controls, policies, and procedures and ensure adherence through improved monitoring.

More specifically, DCSD will continue to:

– Monitor and ensure the accurate and timely completion of bank reconciliations.

– Work towards implementing the general billing module within our ERP system to track receivables accurately.

– Upon implementing the human resources/payroll module fully, we plan to keep track of payroll withholdings payable within a designated clearing fund.

– Add an additional layer of workflow for journal entries and financial statement adjustments.

– Fully utilize the capital asset module and clean up reporting classifications.

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