January 2010
Schools all over the country, including Fort Cherry, were deliberating on whether or not to compete for the Race-to-the-Top Grant.
According to a U.S. Department of Education news release, state qualification entailed:
"The final application also clarifies that states should use multiple measures to evaluate teachers and principals, including a strong emphasis on the growth in achievement of their students. But it also reinforces that successful applicants will need to have rigorous teacher and principal evaluation programs and use the results of teacher evaluations to inform what happens in the schools."
Observer-Reporter (Washington, PA)-January 17, 2010
Board member Jamie White asked Director of Curriculum, Tricia Craig, if the District would have to give the money back if the criteria of the grant were not met.
Craig’s response: They never want the money back.
May 16, 2011, Fort Cherry Committee Meeting
During the “Discussion of Bills for Payment” segment of the meeting, board member Chris Lauff questioned an entry for $9,500 for hotel rooms at the Hilton in New York.
Sroka defended the expenditure by explaining it came out of grant money.
Lauff asked why the District would spend money - even grant money - on travel, immediately after announcing the planned furloughs. Lauff questioned why the money had to be spent on travel, when it could have been put to better use.
Sroka’s response: It would be irresponsible to not spend grant money because if you don’t spend it you have to give the money back.
Do government agencies want the money back, or not?!
According to the 2009/2010 Annual Financial Report, Fort Cherry received:
$1,096,149 - federal grant money
$8,677,680 - state grant money
The board and the public are not given detailed information of grant money expenditures.
· There is conflicting information as to how excess grant money is used.
· Where is the accountability?
May 9 & 11, 2011, Fort Cherry Budget Meetings
Board member Chris Lauff asked if a budgeted software expense of $42,000 could be taken from newly created “Reserve for Technology” fund (which has a balance of approximately $710,000) instead of the General Fund. Freeing up the $42,000 in the General Fund could eliminate the need to furlough a position.
Sroka’s response: That technology money is in reserve and cannot be used.
May 16, 2011, Fort Cherry Committee Meeting
Board member Chris Lauff once again suggested using funds from the “Reserve for Technology” fund for the $42,000 software purchase.
Considering that software is a technology item, it seems fair that the money should come from the technology account, freeing up the $42,000 in the General Fund to possibly eliminate the need to furlough a position.
Sroka’s response: You can use that money, but once the fund is depleted there will be no money for technology.
Can the technology money be used, or not?!
· As with the grant money, the administration is providing conflicting information.
· Where is the accountability?
At the same meeting, Board Treasurer Elmo Cecchetti reminded the board that every year in the past, approximately $250,000 was transferred into the technology fund.
Dinnen added that it was the former Capital Reserve/Technology Fund and that FC has always used it for technology purchases.
A Brief History of Fort Cherry’s “Reserve for Technology” Fund
Prior to the December 2010 board meeting, the “Reserve for Technology” fund was classified as a 1432 Capital Reserve Fund.
By municipal law, the 1432 Capital Reserve Fund was comprised of SURPLUS LOCAL TAX MONEY. (In other words, if as Cecchetti says it was $250,000 every year, then 5.5 mills of surplus local tax money were transferred into the fund every year).
By municipal law, Capital Reserve Funds were to be used for building improvements and school bus purchases ONLY.
Under the state’s new accounting rules, Capital Reserve Funds were to be reclassified as Capital Projects Funds.
At the December 2010 board meeting, Fort Cherry’s Capital Reserve Fund was reclassified as a “Reserve for Technology” fund – clearly going against the state mandate.
HOW COULD THIS HAPPEN?
Remember Dinnen stated at the meeting that the “Reserve for Technology” fund was the former Capital Reserve fund that FC has always used for technology.
When questioned about the transfer of the money from Capital Reserve into a Technology Fund at the December meeting, the administration’s explanation was that they thought the money was to be used for Technology all along, and therefore they are now just classifying the money correctly.
The administration is claiming ignorance, even though the state has issued two separate accounting bulletins reminding school districts of the proper use of Capital Reserve Funds (see bulletins at the end of this post).
So, in spite of the accounting bulletins prohibiting technology expenditures, Fort Cherry has been using the money from the capital reserve fund to purchase technology for years.
If they had no idea that the state did not allow such purchases, why did they report the money as being spent on “Facilities Acquisition, Construction and Improvement Services” instead of “Technology” on the Annual Financial Reports submitted to the state?
Capital Facilities Acquisition, Construction and Improvements are capital expenditures incurred to purchase land, buildings, service systems and built-in equipment. Expenditures include the initial purchase of land and buildings; construction; remodeling, additions and improvements to buildings; initial installation, replacement or extension of service systems; and other built-in equipment, as well as improvement to sites, and activities related to all of the above.
Manual of Accounting and Financial Reporting for PA Public Schools
Chart of Accounts
Revised 7-1-09
· There is conflicting information as to how the money was actually spent and what was reported to the state.
· Where is the accountability?
WHY DOES IT MATTER?
This administration has been providing dubious answers to the board, the public, and the state.
As representatives of the taxpayers, the school board is entrusted to make informed decisions that affect our children, our teachers, our community, and our tax bills.
How can the board make an informed decision based on the misinformation provided by the administration?
Accounting bulletins located on the PA Department of Education webpage: http://www.portal.state.pa.us/portal/server.pt?open=514&objID=509577&mode=2
Accounting Bulletin #2007-01
SUBJECT: Accounting for Capital Reserve funds authorized by
Municipal Code 53 PS 1431 - 1436
Effective Immediately
Date: December 12, 2007
The information in this bulletin supplements Accounting Bulletin # 2003-01. It provides clarification regarding accounting procedures related to the establishment and uses of monies transferred to a 1431 Capital Reserve fund by school districts.
1) Schools may not deposit bond proceeds directly into this fund. 53 PS 1432 states that this type of fund may only consist of: 1) moneys transferred during any fiscal year from appropriations made for any particular purpose which may not be needed; or 2) of surplus moneys in the general fund of the treasury of the municipality (school district) at the end of the fiscal year.
2) The money in this type of capital reserve fund may only be used for the following expenditures: capital improvements and for replacement of and additions to public works and improvements, and for deferred maintenance thereof, and for the purchase or the replacement of school buses, and for no other purpose. Transferring money out of the Capital Reserve fund is not permitted.
3) The construction of new buildings and the debt service associated with these projects have been determined to fall within the parameters of capital improvements. As such, accounting transactions that involve the money in the Capital Reserve fund must be maintained within this fund. The remainder of the project not covered by the money in the Capital Reserve fund should be accounted for in a Capital Projects fund.
Schools should use discretion when determining whether to establish a Capital Reserve fund for new construction. The recommended accounting procedure for future construction projects is to designate a portion of the Unreserved/Undesignated fund balance for this use. Designating these funds will remove them from the available portion of the fund balance, but allow more flexibility with regards to the use of the money for unexpected emergencies.
Any questions regarding this bulletin should be addressed to Mary Kay Beer in the LECS Comptroller’s Office, School Finance Division at (717) 783-9003 or mbeer@state.pa.us
A.A Accounting Bulletin #2003-01 |
SUBJECT: Capital Reserve Funds |
Effective Immediately |
Date: June 9, 2003 |
This accounting bulletin is to provide clarification on the two types of Capital Reserve Funds available to school entities in Pennsylvania. The Manual of Accounting and Financial Reporting for Pennsylvania Public Schools (Manual) addresses Capital Reserve funds in Chapter 5 – Special Revenue Funds. As discussed in the Manual, a Special Revenue Fund is used to account for financial resources that are legally restricted to expenditures for specified purposes. More specifically, a Capital Reserve Fund is used to account for expenditures that are capital in nature, and both kinds discussed below require annual disclosure in the General Fund Budget (PDE-2028) submitted to the Department of Education (PDE). The first type of Capital Reserve Fund is established in 24 PS 6-690 of the school code, and accounts for revenues resulting from the levy of a special tax by the school district. The usage of the money is limited to constructing a school building project that is approved by the PDE. Also, a board resolution detailing the millage, which may not exceed three mills in any one year, and a timeframe for the project is required to establish this type of fund. Furthermore, a 690 Capital Reserve Fund has a life of five years from the date the initial payment was made into the fund. If the intended project does not materialize, the money must go back to the General Fund in equal amounts over five years. Section 1850.1 authorizes Area Vocational Technical Schools to establish a Capital Reserve Fund with the same limitations, with the exception of the special tax levy. The second type of Capital Reserve Fund available to a Local Educational Agency (LEA) is discussed in 53 PS 1432 of the school code. This type of fund may consist “(a) of moneys transferred during any fiscal year from appropriations made for any particular purpose which may not be needed” or “(b) of surplus moneys in the treasury of the municipality at the end of the fiscal year.” Section 1434 further stipulates specific purposes on the allowable expenditures of these funds. The moneys in this type of fund may be expended “only for capital improvements and for replacement of and additions to public works and improvements, and for deferred maintenance thereof, and for the purchase or the replacement of school buses, and for no other purpose.” The Comptroller’s Office highly recommends that LEA personnel use discretion, as well as a consultation with the LEA solicitor, before establishing either of these funds. Questions regarding this bulletin may be directed to the School Finance Division at (717) 783-9102. |
