The findings released on Monday by the Office of the Washington State Auditor, or SAO, were briefly discussed by the Moses Lake School Board. Statements from September 2023 to August 2024 were examined by the federal and financial audit to determine compliance and if MLSD was allocating taxpayer funds appropriately.
Although the budget, revenue, and expenses were balanced, the state did not object to MLSD’s overall financial records. However, there was insufficient evidence to sustain around $4.4 million in federal funding.
Additionally, SAO found $6.8 million in unsupported federal grant costs from 2022–2023 because MLSD did not submit the required paperwork. The district had to follow up with evidence before the following audit, which marked that issue as entirely rectified in the most recent one.
Superintendent Carol Lewis stated on Thursday that using some of those special purpose funds to make up for the general apportionment budget shortfall was one of the things we did to get by during our actual emergency. As soon as possible, we must stop doing that in every way we can.
Following the rejection of two consecutive charge proposals by taxpayers last year, an investigation revealed a shortfall of about $20 million. According to MLSD Business Manager Ruby Perez, hundreds of workers lost their jobs, and the issue was made worse by an average yearly drop in enrollment of about 2%.
Perez stated that MLSD only budgeted for a cautious 1% decline, with the hope of reversing the trend this year.
A new tax was just passed by voters, and MLSD will begin collecting it the next year. Lewis stated that maintaining federal grant compliance remains a high priority, even though the district balanced the budget in advance of this fall.
Lewis clarified, “I have made it very clear to the board and the public that this was sort of a one-time thing.” That doesn’t put us in serious jeopardy, but if we don’t adapt, we will.
According to her, MLSD must come up with a different strategy because it is unable to continue using special-purpose monies for general education costs like teacher salaries. The grants must originate from the general budget or another source, and they must be set aside for particular employees or other costs that the funds are meant to cover.
According to Lewis, MLSD found flaws in internal control that resulted in significant noncompliance and material weaknesses. In addition to the much-awaited accountability audit, SAO will confirm if MLSD took corrective action during its federal and financial audit next spring.
Before the most recent levy vote, taxpayers demanded that the board conduct a forensic audit; however, officials delayed the proposal, citing the impending accountability audit. An accountability audit examines adherence to local and state regulations, whereas a forensic audit looks at possible fraud and misbehavior.
Missing time-and-effort documentation for COVID-19 financing, Title I awards, and special education grants was discovered during a recent audit of federal grant compliance. Without all of it, the state cannot assess whether MLSD charged those expenses correctly, according to SAO Communications Manager Adam Wilson.
Wilson told The Center Square, “We don’t know if the district will have to repay any funds.” As they proceed through a procedure known as audit resolution with the federal government, the district will collaborate with the state Office of Superintendent of Public Instruction to ascertain whether they have any further paperwork to substantiate those expenses. The problems we discovered during our most recent audit will be investigated further.
Time-and-effort finds are typical, he said, but they should be handled as soon as they appear.
Should MLSD be required to reimburse roughly $4.4 million, public funds in the general budget will probably be used.
Lewis stated that because to the absence of internal controls and oversight for special-purpose funding, OSPI will put MLSD on an improvement plan. In order to guarantee that everyone is aware of how the funds are being used, OSPI has also advised MLSD that it needs personnel to supervise this job and submit the necessary paperwork.
“We lose out on the millions of dollars that come with this if we don’t do this correctly,” Lewis stated.
Lewis was approached by The Center Square for additional clarity, but no response was received prior to publication.
