Audit shows budget errors and omissions at D150

Holy Toledo. I don’t generally read the Peoria Story blog, but Billy Dennis quoted a portion of this post, and it was so shocking I had to read more.

I’ve read past District 150 audit reports (available here*), and they’ve always been bad — bad enough that it makes me wonder why in the world Guy Cahill is still employed by the district. For example, here’s a note from the June 30, 2007 audit report:

In an ideal control setting, the District would have personnel possessing a thorough understanding of applicable generally accepted accounting principles staying abreast of recent accounting developments. Such personnel would perform a comprehensive review procedure to ensure that in the preparation of its annual financial statements that such statements, including disclosures, are complete and accurate.

And this:

The overall internal controls over the District’s accounting system are not adequate to ensure that misstatements caused by error or fraud, in amounts that would be material to the financial statements, may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions.

That was the second year in a row the district got that last note. The 2006-07 audit was also the one that reported the district’s misallocation of over a half million dollars in Title I funds. But evidently the latest audit report takes the cake:

“The November 14, 2008 audit report, prepared by Clifton Gunderson LLP, for the 2007-08 school year, shows the District #150 administrators failed to budget $10,410,849 when budgeting for Teachers Retirement Service (TRS) pension contributions. […]

“This was not a new expense – the district has been budgeting for “on-behalf of” contributions to TRS for years. Their actual expenditure for this item during the 2006-07 school year was $7,264,468. How did they “forget” to budget over $10 million in expenditures – and revenue – for the 2007-08 school year?

“Further, how and why did the TRS provision grow over $3 million in one year? Did teacher salaries increase so much in one year that 10% of that increase amounted to $3 million?

Since the revenues and expenses for “on-behalf of” contributions to TRS effectively cancel each other out, the issue is more about transparency than anything else. If the public were to see that this fund grew by over 43% in one year, they might start asking questions — like, “why is that amount rising so dramatically?” and “what other information is the district hiding?” With omissions this great, how can we believe anything the school administration says about the budget and the need to close a high school? Incidentally, the “on-behalf-of” contributions are not on the 2008-09 budget that was submitted to the Illinois State Board of Education (ISBE), either.

Something I’ve always wondered is how District 150 can keep sending incomplete reports to the Illinois State Board of Education (ISBE). For instance, the last three years (2006-2008) of the district’s Annual Statement of Affairs (available here*) leaves required information completely blank, including salary schedules and non-salary payments over $2500. It is required by the State that the district report this information, and yet it hasn’t for multiple years, keeping taxpayers (and the State regulating agency itself) in the dark. With as many administrators and consultants as District 150 has, surely someone could be tasked with completing required reports.

These questions deserve answers. The information reported on Peoria Story has been forwarded to District officials. It will be interesting to hear their response.

*Note: If you want to look up the financial data or Statement of Affairs reports on the ISBE website, they’re listed by the district’s code number, which is 48-072-1500-25.

91 thoughts on “Audit shows budget errors and omissions at D150”

  1. Wouldn’t it be more like, “Let’s Spend the Night Together” by Three Dog Night? Oh yeah, that song was by the Rolling Stones…… written by Mick Jagger. Hmmm Wouldn’t he be considered a dog by some people?

    Anyway you look at it, we’re getting screwed!

  2. “Further, how and why did the TRS provision grow over $3 million in one year? Did teacher salaries increase so much in one year that 10% of that increase amounted to $3 million?

    If $3M is 10% of the total amount of teacher salary increases from 2006-07 to 2007-08, that would mean that the total teacher salary increase was $30M, correct?

    If there are 1200 teachers who received that $30M salary increase, that would mean each teacher in the district received an average $25K raise for the 2007-08 school year, right?

    Hope some of the district teachers post to let us know if they received that very handsome raise. If they didn’t, where did the money go?

  3. Please quit blaming teachers and their salaries for District 150’s problems. Administrator’s are in TRS as well. The $3 million increase is probably due to penalties the District acquired such as ERO penalties. I know for a fact that one principal retired a year early and the District had to pay over $100,000 to TRS in Early Retirement penalties.

    Teachers did not receive even 3% last year.

  4. If this were a private business, there would be all kinds of shareholder lawsuits (the Enron boys went to jail, too, didn’t they?). If you want to make govt. operate more effectively -more like a business – then make their officials subject to shareholder (taxpayer) lawsuits like corporate directors are.

  5. lenscover2, I do not think anyone is blaming teachers and their salaries for the districts problem. I believe what they are pointing out is that it is impossible to have those numbers and were being facetious. The teachers could not possibly have gotten that kind of money. There is definitely something wrong in the accounting department.

  6. Lenscover- this topic and the original post by Elaine Hopkins is definately not a “light read”. I have a hard time comprehending some of the points as well, but I understand it well enough to state that definately NOT an indictment of teachers. The overall premise of the article is that the District is using FLAWED DATA to make a case for school closings.

  7. Thank you, Ima Swede. It would be nice if a teacher would confirm what we already are thinking – that there is something wrong with the $3M figure.

    Lenscover2 – so now they are paying ERO penalties too? Isn’t that more support for the argument the administration is making mistakes?

  8. “Lenscover2 – so now they are paying ERO penalties too? Isn’t that more support for the argument the administration is making mistakes?”

    Not directly, it’s an argument that school administrator salaries in Illinois is out of control. The school board is singularly responsible for that.

    For example, the Niles superintendent made over $400,000 last year with the board citing his responsibility over a $120 million budget; a budget slightly smaller than each of the county, city, and school district here in Peoria.

    It’s a racket, I tell ya.

    The penalty is in place to keep districts from spiking pay. If pay levels are spiked above 6% in a single year, then the district, ie taxpayer, is on the hook instead of the pension plan.

    The pension is funded three ways, employer and employee contributions, and interest earnings. The contributions are pooled to generate interest, so when these individual districts jump their benefit liability, the impact has historically been spread over the base (the whole pension base). No more in 2005. The pension board said if you’re going to continue to spike pay, then you need to pay for the liability incurred over 6% locally. Locally means taxpayers in the district where the above 6% annual pay spike occurred.

  9. ed, Let’s not muddy the waters on the issue by painting this as an “Illinois” problem.

    I’m not sure how the performance of the Niles School District matches up to the overall performance and parent satisfaction of District 150, but suffice it to say I don’t believe you would see a public outcry if our Superintendent received a salary increase that was well deserved and performance based.

  10. test scores dropped in Niles. the board president stated the money was well spent and that he was “pleased”.

    and, it is an illinois issue. the recently retired u-46 super left with a parachute totaling something on the order of $1.2 million. google connie neale.

    http://www.suntimes.com/news/education/1408625,CST-NWS-supt02.article

    illinois has convinced itself that the knowledge used in managing education is so niche, and so specialized that the amounts paid to innumerous hacks is unquestionable. i applaud daley for appointing the bus guy to lead cps, just as arne duncan was a brilliant choice. the notion that ed phd are needed to run schools is not evidence-based. it’s foolishness.

    it’s an illinois issue.

    to your point, i would suggest reconciling overall performance and parent satisfaction of D150 would require a larger degree of parental involvement. i know the test scores of the school my children attend, i know the effort of the teachers. i’m satisfied. i’ll leave the administration stuff to you guys because i don’t have the stomach for it. if the level of governing and administrative incompetence hits my children’s academics, then perhaps.

    i will say this, it is blatantly clear what the problems are, and where the problems lay. what’s even clearer is how long they’ve been around. audit after audit have pointed out what needs to be done, going back six or seven years now. gorenz and the ilk are responsible yet, they don’t feel accountable because they keep getting elected. someone once wrote on these boards that the school board isn’t like other governing boards. in practice, yes. in statute, no. it’s clear the board policy of “this too shall pass” is working.

  11. A very special thanks goes to Elaine for prdducing this document and to Billy and C.J. for getting the information to their readers. Needless to say, your blogs were all the talk at the Retired Teachers’ luncheon today. Public bodies and District 150, especially, are going to have to get used to the idea that the blogs will bring transparency to government.

  12. Isn’t 400K what the President makes? Isn’t 400K considerably more than Senators, Congressmen, Supreme Court Justices, and the Governor makes (the latter, legally, at least)? With all due respect, Diane, there is NO justification – none – for paying a school supt., any school. supt., I don’t care how good he is, 400K a year. “A racket?” I’d say that’s a polite way of putting it. But, until the taxpayers stop buying the crap dished out by politicians – on both sides of the aisle – and demand these rip-offs stop, we are going to continue to have top heavy districts with overpaid administrators running sub-standard schools, producing un-educated graduates (which is what some of them want – nice, stupid, compliant little sheep).

  13. I hope someone who knows what they are talking about brings this up tonight at the board meeting

  14. Mouse – I wasn’t advocating for higher admin costs. Can’t remember what exactly my point was but I know it wasn’t that! lol!

  15. The School Board meeting is being televised with no sound. I remember last Summer during a controversial board meeting the same thing happened.

  16. This is censorship plain and clear! And not the first time they have done this. Are these meetings available on tapes or CDs for later viewing? Are they going to post word for word what was said at the meeting? I absolutely believe this is done on purpose because they do not want to “rile” the public.

  17. I don’t think they are required to broadcast the meeting so I don’t think this is censorship. It’s an open meeting – you can always go in person.
    I am sure they are having some tech problems.
    Chill.

  18. I find it too coincidental that this happens during extremely controversial meetings…. when things are blocked… it’s censorship.

    Censorship is the suppression of speech or deletion of communicative material which may be considered objectionable, harmful or sensitive, as determined by a censor.

    This is publicly funded is it not?

  19. So much for a free society.

    If they knew how goofy they looked sitting there twiddling their pencils and their thumbs without sound they would definately re-think that. 😉

  20. I am a teacher and I can assure you I did not get a $25,000 raise. But as I said before I would take Hinton’s salary and then be frozen for the next 20 years and be happy.

  21. I am sure they are having some tech problems.

    Um, would the tech people by any chance be the same people that work on their budget?

  22. The best damage control that the administration and BOE could come up with for tonight was to have “technical difficulties”? BTW yes, they do tape the meeting complete with audio as a direct feed to their in-house recorder… And yes, it it subject to FOIA requests. Of course they are being short sighted too in that any of their rebuttal, or indignatation was not heard by the viewing audience either.

    PS peoriafan – pls give Jimmy a kiss when he gets home…he’s had a rough night defending the district’s incompetent highly paid administrators!

    Ohhhhhhhhh, 7:38 and they found the problem!

  23. Dr. Gorentz said that it would be rebroadcast with sound — please check your local listings.

    My in person notes — this is what I thought I heard.

    Decrease in revenue developed relatively rapidly. Necessitated we needed to respond in an accelerated manner as well. … sale of property, buses not purchased … resulted in a $3M in savings.

    Economic stimulus package may provide D150 with money over two years.
    Is that money be able to be used for operations?
    Stimulus passed House.
    At least some of those funds will be able to be used for Title I and Special Education.

    *****Urgency has been mitigated with stimulus plan being passed. ….

    This affords us more time for planning. ….. Systematic process ….

    *****Special Board Committee will be established to evaluate ideas and so forth.

    *****Delaying public forums.

    *****No plans to close schools this/next (? not sure which word he used) year.

    *****No plan for lay-offs this/next (? not sure which word he used) year.

    Public comments followed.

  24. I was at the meeting tonight. My take on what happened is that the board caved to public comments and I think to the latest budget developments, even tough they were not specifically mentioned.
    What happened: Dr. Gorenz made a statement during the “announcements” (before public comment) basically saying that the urgency for immediate action on additional cuts has been “mitigated” by the potential money incoming from the stimulus plan (which I mentioned at the last board meeting, btw!). He wants to form a special committee to work with the administration about funding/spending issues. They will help to obtain and organize financial information about the district and investigate the effects of any expenditure reductions on the students and the community. (I was trying to take notes as fast as I could.) He said that there will be NO layoffs or HS mergers for next year because now they have time for extra planning! CAVE and also a kind of shot at Mr. Hinton, IMO.
    The article by Elaine Hopkins was mentioned by Jeff Adkins-Dutro. When I spoke I said that community buy-in to whatever was proposed (now or future) would not happen unless the public believed the numbers coming from the administration. I said that right now there is little public faith in the numbers.
    So,…now we see what happens. I believe we still have to hold the district’s feet to the fire regarding their previous and current budgets and all of the discrepancies and errors. This admin needs to GO.

  25. Thank you Carrie, and Hot in the City. That was torture watching with no sound, although it was rather comical 😉

  26. So, what was the deal with Hinton’s contract? He gets a bonus when he leaves if we are in the black?

    If this is true, they better work fast…

  27. I agree – they need to go. Do I here anyone suggesting recall petitions for at least 5 of the BOE members? Suggestion to the teachers and other staff – start a no confidence vote movement for Hinton and Cahill!

  28. ImaSwede,
    Whoa! I’m taken! I really do want to hear what they (BOE) said or didn’t say tonight in their defense of the budget errors and omissions. It’s one thing to be defendsive when you’re right, but when the numbers were approved by you (BOE) and then the results were audited by a highly reputable accounting firm which you (BOE) paid $100,000 for their services then I think the defendsive stand reveals the shallow understanding of the massive taxpayer drain District 150 has become…being a rubber stamp board on a small budget is one thing, but a district which ANNUALLY spends over $150 Million dollars of taxpayer derived money demands a board which will hold their HIRED administrators accountable.

  29. Where are the SPED teachers? Are you getting raked over the coals regarding your budgets and expenses? Don’t forget the Orphanage Act…. that money is ONLY to be used for kids in those schools. If it is going elsewhere, it is illegal!!!

  30. You gals are kicking ass. Diane, Karrie, Elaine and you others that I do not know…..I could not be more proud of you.

  31. “PS peoriafan – pls give Jimmy a kiss when he gets home…he’s had a rough night defending the district’s incompetent highly paid administrators!”

    sorry, you must think I’m someone else a**hole

  32. two thoughts:

    1. the stimulus bill was passed by the house. since we have a bicameral system, what’s to say the senate changes don’t alter education spending? Is the “stimulus” funding a red herring? Was there ever a 9MM hole? Inquiring minds WANT to know…just a little…

    2. I would think that given the announcement the board has committed to no changes for the next academic year, which means nothing material changes until fall of 2010, isn’t now a good time to change the financial leadership? I can understand keeping Cahill around to avoid any learning curve in crisis, but voila, crises averted…carpe diem!

    So nice the admin and board can look at the principals, kids, parents, taxpayers, and community and with a straight face say “They” averted a crises.

  33. Dang it, Chase. Thank you for the kind words. Trust me, we’d rather be watching soaps and eating bonbons in our spare time, but since the “establishment” seems to be so caught up in their love-in, I guess it is up to us to look out for ourselves.

    My hope now is that others far greater and more influential than we get the message and start Kicking a$$ and taking names. It is high time we straightened out the mess in District 150. We should all be judged by how we treat our children.

    As Jim Ardis recently said…”Until we get that house in order nothing else we do will matter.”

  34. peoriafan/jimmy/whoever you want to be tonight – that’s YOUR problem…but having a CPA firm that the BOE paid $100K to audit and tell you ( since you are so offended) that cahill and hinton “lied” “mislead” or “was so stupid to say” tells me and anybody else that ALL of you on the BOE needs to look deep within your soul and ask why are you thrashing your own creditability to save these losers named hinton and cahill. Think about your response or let wifey speak for you AGAIN!

  35. That was an amazing meeting–you had to be there (and maybe tomorrow night you’ll get another chance). Of course, no one (board or administration) responded to Jeff’s and hot in the city’s comments regarding Elaine’s article. However, this is the first time (I think) that Cahill was totally silent–no one asked him any questions and he didn’t offer any comments. I am not good with numbers, so I haven’t figured out all the implications of Elaine’s document; however, I have the feeling that things are worse than previously reported. I wonder if the stimulus package will take care of all that. Personally, I believe the stimulus package gave 150 the convenient out they needed–considering Elaine’s article, the alumni ad in the paper today, and public pressure, in general.

  36. I agree with Ed. I think the requirement of education certificates for administrative positions is very limiting in terms of the quality of leadership that public schools in Illinois can select from.

    Some administrative positions require knowledge of education but . . . many others do not. District 150 is one of the largest employers in Peoria and has many facets to it, only one of which is education. My concern is that when Hinton retires, we will dip into the pot and not get any better qualified candidate because the Board will be looking for someone with previous superintendent experience within an urban setting, because they have to by law.

    A large school like Dist. 150, with such varied issues, would be well served to have as it leader a person experienced in business, a graduate of a competitive MBA program, be well-trained in finance and accounting, and perhaps have some experience with building/construction. And with an offering salary of almost $200,000, that would seem to be right in line with what the market would bear.
    No wonder people are so frustrated with administration at the District, I think most of the present administrators are out of their league. Many have been around the District for 20 years or more and the financial, legal, personnel issues, building/construction considerations are much more complex than back in the day.

    At the risk of being kicked off this blog page, I will go out on a limb and state that I think Hinton is the least of the District’s problems in terms of leadership. I have worked with him in the past and found him capable, but perhaps a bit over his head. What I found totally substandard was many of the administrators that reported to him. Because they added zero value, Hinton seemed to always be running around, trying to cover all the bases and do all the thinking.

    SO . . . what is my point, retiring Hinton and hiring a new leader will not cure the problem.

  37. Frustrated: I, too, am afraid to say what you just said outloud. Hinton inherited some of the administrators about whom you speak and selected some of the others. I think Hinton and the others just don’t know how to respond to the almost insurmountable problems in the public school–and, by trying to save face instead of admitting to the problems, they keep making one mistake after the other (and lying to the public through PR propaganda). As a friend of mine often says, District 150 also seems to have the wrong solution to the real problems.
    As to the type of education needed by administrators, I fear that they need more than degrees in education, business, etc. They need to be truly “educated” themselves–to have a broad education–not the “narrow” degrees that are required to earn an administrative degree, etc. Frankly, to be an expert in education, I think a person really has to have extensive classroom experience–to observe first hand the learning process of young people. Also, they don’t have a handle on the day to day problems faced by teachers. Far too few of our current administrators (central and building) have had enough years in the classroom. Board members also lack that experience.
    For instance, tonight Mary Spangler revealed that she really has no idea of how much the gang culture has infiltrated the schools. She made what I am sure was a mistatement tonight when she said, “We don’t educated gang members.” She complained that many people were asking the board to make decisions (about merging two schools) based on the influence of gangs, etc. Besides, she stated that the district as a zero tolerance policy. Mary, I guess, is naive enough to believe that a policy has anything at all to do with reality. I understand what she was trying to say–that we shouldn’t allow gangs to dictate decisions about schools. However, the administration and board do have to acknowledge the existence and the role they play in problems in all of our high schools. Then with that knowledge–facing reality–they need to make decisions as to how to handle the problem. Instead, they make plans, ignoring the real problems.

  38. Agreed Sharon. Well said.

    The PJStar reports that the District is working on a proposal to encourage more parental involvement and an initial draft of the proposal sets a minimum of five times per school year that parents must “engage” with the school. But what if there is no engagement, then what? What could the consequences possibly be?

    Parent involvement in education is definitely one of the keys to student success but it doesn’t begin or end with the number of times a parent shows up at a school function. You cannot legislate or beat people with a stick to do the right thing.

    Like so many things, the District is misguided in its efforts. Perhaps it should concentrate on behaviors it has a right to control and that will have immediate effect, such as cracking down on the errant behavior so often mentioned by Sharon in her posts.

    My last post was less than favorable regarding the performance of those reporting to Hinton. I usually try to refrain from bashing the Board and Administration because although some of this mess may be their own making, much is not. Even if the budget was balanced (and correct) and dynamic administrators were leading the charge, at the end of the day District 150 is comprised of many students that have learning challenges that will be difficult, if not impossible to overcome. What other urban schools have found the magic formula for improvement?

  39. So what needs to be done to change the law so that we have a wider pool of more qualified prospective Superintendants?

    How was Mayor Daley in Chicago able to appoint a Super that lacked these qualifications?

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