By LAURA GIOVANELLI
Evening Sun Reporter
One month after three Littlestown
Area School District residents asked the school board to conduct an independent
audit of its financial reports, a representative from the district’s own
accounting firm told the board its ledgers are in order.
Jim Lyons, president of Greenawalt
and Co., a Mechanicsburg-based accounting firm, gave the board the news during
its regular meeting Monday night.
Lyons investigated allegations made May 21 that the district miscalculated funds
in the district’s treasurer’s reports. Russell Fish, Terry Scholle
and Paul Sharpless attribute the missing funds ú which they said amounts
to about $11 million ú to accounting errors, discrepancies and missing
checks since 1996.
“The public needs to know,
and the board needs to know if it is receiving timely reports,” Lyons
said. “(These men) raised legitimate questions.”
However, Lyons said the men made
incorrect assumptions and generalizations as they assessed the district’s
monthly treasurer’s reports. By evaluating reports dating back to 1996,
the men said they found disparities in the amount of revenue the district was
reporting each month versus the total amount the district claimed in revenue
at the end of each fiscal year in June.
This, said Lyons, is where they
made a mistake. The men should have examined the year-to-date revenue on each
monthly report, rather than the monthly revenue. Lyons attributed specific disparities
between the monthly revenue and a total fiscal year’s revenue to simple
computer errors ú errors he said could be corrected by examining the
district’s year-to-date totals.
Human error was inevitable, Lyons
added.
“You can’t prevent it,”
he said. “I’m sure nobody wanted it to happen.”
Four allegedly missing checks, which
Sharpless drew the board’s attention to in May, also were addressed by
Lyons. Two of the checks were voided and never reported in the financial report,
and two were fund transfers for payroll checks.
“The money can be seen going
into the payroll that day,” Lyons said. “These are normal reoccurring
items.”
He also said anomalies in the district’s
high-interest savings accounts can be explained by payments on bond issues and
routine funding to such programs as the Lincoln Intermediate Unit. In certain
instances, Lyons said, the state will withhold money from the district and give
it directly to such programs.
The presentation didn’t satisfy
Scholle. Calling Lyons’ report the result of brute force used by the school
board, he said the discrepancies he found were based on year-to-date revenue
reports. And that means a school tax increase in Littlestown still is unwarranted,
he said.
“The financial condition of
this district is very unsettled,” he said. ‘We’re trying to
correct a problem and straighten things out. How do you make a decision when
you don’t have the right numbers?”
Lyons’ findings also failed
to satisfy one board member. Eleanor Dehoff said she didn’t understand
why the board couldn’t receive current financial summaries of what is
in its checkbook.
“Otherwise I have no way of
knowing what (money) we’ve got,” she said. “I did my own math
… I’m not an accountant, but I can add and it doesn’t add
up.”
Dehoff also attempted to have the
May 21 meeting’s minutes amended because she said she felt they did not
accurately represent the presentation made by Fish, Scholle and Sharpless.
“It’s hardly responsible
of this board not to record the actual content (of the presentation),”
she said.
Her motion then died for lack of
a second.
Board vice president Ben Ricci asked
both Scholle and Sharpless in turn if they had law, business or accounting degrees
ú a statement that bothered Dehoff.
She objected to Ricci insinuating
members of the public shouldn’t ask questions without the corresponding
degree, she said.
Russell Fish did not attend Monday
night’s meeting.
Lyons said school board president
John Warehime asked him to look into the accusations raised by the three men
shortly after last month’s board meeting. Greenawalt audits about eight
school districts in Pennsylvania. The firm has examined Littlestown’s
books for about 20 years.
“We wanted to add weight against
these wild accusations,” said Warehime, adding he was fully satisfied
with Lyons’ investigation.
Monday, the board voted 7-1 to hand their financial reports from the 2001-02 fiscal year over to Greenawalt again. Dehoff cast the opposing vote.
Despite rumblings that a tax increase
is not needed, Littlestown Area School District passed its 2002-03 budget by
a 7-1 vote Monday.
The district faces about a $600,000
shortfall between anticipated expenditures and revenues next year ú a
gap that partially will be covered by raising the occupational assessment tax
from 75 to 100 percent.
The tax, currently the lowest in
Adams County, would bring the district an additional $342,089 in revenue and
would result in a 33.3 percent tax hike for working residents.
At the current assessment, a resident
with a job rated at 300 ú which includes teachers, electricians, police
officers and many other occupations ú pays a tax of $225. At 100 percent,
the same resident will pay $300.
The remaining deficit in the $18.3
million budget will be covered by a $300,000 withdrawal from the district’s
rainy day fund balance. About $2.26 million will remain in the account.
There will be no increase in property
taxes for the 2002-03 school year.
Since last year, Littlestown’s
budget has grown 7.8 percent. The district’s new teachers’ contract,
which raises salaries 4 percent next year, will cost the district an additional
$289,282. About $125,000 will be spent on health insurance coverage for district
employees. But one of the biggest expenses Littlestown faces is the debt payment
ú more than $350,000 ú on the district’s new school for
fourth- and fifth-graders. Construction on the building, which carries a proposed
$8.4 million price tag, will begin this summer.
The tax increase passed Monday despite
objections from residents Terry Scholle and Paul Sharpless. The two men, along
with Russell Fish, asked the board in May to reconsider the proposed increase
and instead use money they said is unaccounted for the district’s financial
reports.
Board member Eleanor Dehoff also
objected the tax increase. She voted against the budget, as she voted against
it when it was tentatively approved last month.
“I’m trying to make
our board have a better budget. My concern is that we don’t budget what
we are anticipating,” she said.
Dehoff said she was concerned about
the amount budgeted for substitute teachers. Last year, she said the district
anticipated spending $90,000 on extra teaching staff, when it actually ended
up paying substitutes about $130,000.
The new budget will go into effect
beginning July 1.