A panel looking at the finances of Education Plus, the training and purchasing cooperative made up of more than 60 area public school districts, found that budget figures concealed deficit spending, overstated revenue and understated expenses.
The four-member review team submitted its report to the Education Plus board at a meeting Monday. It recommended that the board form a finance/audit committee, separate from the board/executive director structure, and that the committee meet more regularly than the board and review financial reports.
The review of the finances of the organization formerly known as Cooperating School Districts comes in the wake of the departure of Executive Director Don Senti last month. At the time, the organization said Senti was retiring because of health issues and going on immediate medical leave.
But documents obtained by St. Louis Public Radio found that finances at Education Plus had been in disarray during Senti’s tenure, which began in 2011. Before joining the agency, he had been superintendent of schools in Parkway and Clayton.
Among problems that came to light in the wake of his departure were a steady decline in the organization’s financial reserves, a drop in operating revenue and an increase in expenses. To bolster the budget and pay its bills, Education Plus cut staff positions by 20 percent and sold $1 million in investments.
After those problems surfaced, the board named the four-member committee to study the group’s finances. Among its findings:
- The 2014-15 budget “includes a line item that conceals planned deficit spending.” The amount of the item, nearly $160,000, shows revenue from a prior year as revenue for a second time.
- That year’s budget also contained little information about reserves how they are affected by deficit spending. “This is not a direct misrepresentation,” the report said, “but the notable lack of information is concerning.”
- Because of these shortcomings, the panel said, the board at Education Plus would have thought the budget was balanced, but it actually had a deficit of more than $845,000.
- Revenue for that year, budgeted to be $5.56 million, was only $5.16 million. And expenses were just over $6 million.
Looking ahead, the committee found that a projected year-end cash balance of $124,000, plus $500,000 more in investments, may not be sufficient given the organization’s current deficit.
Further, it said that “we are not aware of how proposed cuts for next year have been verified or if they are feasible.”
Besides saying the board should create a finance committee, the panel also had these recommendations:
- Consolidate responsibility for all financial matters in one position, a chief financial officer. That job had been eliminated by Senti before his departure.
- Regular budget adjustments should be taken to the board.
- All financial reports should include a brief written analysis addressing changes and variances.
- Develop guidelines on positions are added, changed or eliminated, and have the board involved in all hiring and firing decisions.
- Evaluate any increases in salary in the light of the current financial situation.
After Senti’s retirement, his job has been taken on an interim basis by his predecessor as executive director, John Urkevich.
