Todd Drafall, the new finance director of Proviso Township High School District 209, had good news for the school board at its October meeting: the Township Treasurer’s Office, a separate government unit which oversees finances for multiple school districts, had finally agreed there was $1.18 million in the Proviso school registration fees bank account – instead of $400,000.
The school district’s new auditors, Mathieson, Moyski, Celer & Co., LLP, found the discrepancy at the turn of the year, and reported it with their audit. The district’s bank account showed a June 2012 balance of $509,498.52 in the registration fee account. But the Township Treasurer’s Office audit displayed a negative balance of -$121,850.
MMC flagged the discrepancy as a “significant deficiency” in a report dated Dec. 12, 2012. According to the report deposits were not recorded and the amount of cash was “understated” by the district by $800,000.
“The problem we found is basically the township treasurer’s office thought the district was doing the bank reconciliation and the district thought the township was doing it,” said auditor Brett Mathieson. “It was happening for at least two years, that we found.”
“The (Proviso) district deposits funds, but it doesn’t control the account,” said Drafall. When the school district’s auditor asked the township to reflect the correct balance in the account, the township refused, Drafall said.
At its second audit, the end of fiscal year 2013, MMC noted the problem had still not been resolved and the account was now off by $1.18 million.
“At our initial meeting with the TTO staff, they refused to assist the district and they would not acknowledge the issue with their audit having an inaccurate number,” Drafall said.
The account in question, held at Bank of America, is used to deposit registration and other fees from students, such as gym uniform payments, facility rental and other payments made by families, Drafall said. It was also a catch-all account used to deposit insurance withholding payments made to the district – which should not even have been put into that account, Mathieson said.
“Those insurance payments weren’t recorded at all, either on Proviso’s books or the township’s,” he said.
Mathieson said the township office does not run separate accounts for the 14 school districts it oversees, but pools all the money on a general ledger. The district could not have access to that ledger to balance their account, he said.
George Chirempes, chief finance officer at the township treasurer’s office said the township was aware of the unreconciled account and had brought it to the district’s attention.
“We knew there was a difference and we kept asking them why is this thing not in balance?’ Chirempes said. “We saw the gap was large and we brought it to their attention,” he added. “We told them you’ve got money in the bank because it’s there. They are responsible to balance and journalize those accounts.”
“Their auditor had to work with them to find it.” Chirempes said. “We weren’t going to put his number on the books without some verification, but we knew the money was in the account.”
Turnover in the Proviso district finance offices may have contributed to the confusion. The district abruptly fired Business Manager Nikita Johnson in 2011. Her replacement, Romanier Polley resigned in Oct. 2012 and was replaced by a temporary manager Diane McCluskey who resigned in March. Drafall started in July.
With the help of MMC, Drafall has tried to comb through the tangled finances of D209 and he told the board systems were put in place to reconcile the books for that account from now on, he said.
Township offices out of date?
The dispute is just one way that dealing with the township’s office has frustrated Drafall, who wants to streamline business practices to save money. Drafall formerly worked in the Minooka High School District near Joliet.
Drafall is still getting used to the fact that the township treasurer provides monthly finance reports that must be picked up by a driver instead of sent via pdf. He also said the township waits until the last day of the month to release the reports, which means the school district has to scramble to prepare the board finance report every month, and it’s guaranteed not to be completely up to date.
Mathieson said he wishes the township treasurer could do away with the general ledger and make a separate account just for the high school transactions. The high school account sees much more activity than similar elementary accounts – which the township does reconcile.
Additionally, Drafall would like to go to “automatic clearinghouse” (ACH) payments to vendors, which he said could potentially save the district between $5,000-$10,000 a year on the cost of check printing, envelopes and stamps.
“There is some difficulty doing that with software,” Chirempes acknowledged.
“None of these requests are new, untried processes,” Drafall said. “In fact, they are quite common for both schools and businesses. We are simply asking to operate in a more effective and efficient manner being mindful of the resources the community has for educating its children.”