A dual audit of the finances and budget procedures of the Indianapolis Public Schools has confirmed that the district has not been operating at a deficit; but rather with a surplus.
Members of the IPS Board of School Commissioners were briefed by Superintendent Dr. Lewis Ferebee on the results of audits conducted by the State Board of Accounts and the Council of Great City Schools.
The audits confirmed information that Ferebee discovered and shared with the School Board and community in March, which was that IPS was not running multi-million dollar deficits, but rather had a modest seven figure surplus.
The audits confirmed that in 2013, IPS’ actual revenues were $246.2 million and actual expenses of $237.8 million. That gave the district a 2013 surplus of $8.4 million.
The State Board of Accounts, which is the primary audit overseer of IPS and the state’s other school districts, confirmed that the IPS’ 2013 general fund budget was “recorded properly.” The state audit confirmed the validated expense receipts and disbursements were recorded accurately and the audit confirmed that there was a nearly $40 million gap between budgeted expenses and actual expenses.
Supt. Ferebee told the media and the board that the audits “found no evidence of fraud or misappropriation of funds.”
Ferebee told media that “trust and transparency is huge for me” and that he’s “already started to address the recommendations” of the two auditing organizations.
The State Board of Accounts made a number of recommendations, including developing policies and procedures in IPS for internal budgeting control, something the district seemingly hadn’t done.
The Council of Great City Schools, a coalition of 65 of the nation’s largest urban school systems, sent in a special team to audit IPS’ financial systems. The team included the retired chief administrative officer of the Los Angeles Public Schools, the CFO of Atlanta Public Schools, two top financial officers of the Miami-Dade County Public Schools and an assistant superintendent for Business and Finance of the Seattle Public Schools.
That committee made a series of substantive recommendations on improving IPS’ budget and fiscal systems and controls.
Chief among them was moving the district’s fiscal year from a calendar basis to one reflecting the July to June actual school year. Also strongly recommended was that the IPS Board create an audit committee, reorganize IPS’ business and financial department and strengthen internal auditing and controls.
The Great School’s auditors analyzed IPS’ history of projected versus actual deficits. They found an interesting pattern between 2002 and 2012.
From 2002 to 2004, IPS had a real budget surplus. They fell into an actual budget deficit in 2005 to 2007, but told the community in 2006 that IPS had an over $10 million surplus.
In 2008, data showed IPS had an actual surplus exceeding $20 million, while budgeting for a $20 million deficit.
The only year analyzed where IPS’ budgeting and actual deficit numbers aligned was 2009, with a deficit of around $5 to $6 million.
From 2010 to 2012, IPS projected budget deficits of $20 million plus, but actually had a small surplus in 2010 and 2012 and a small deficit in 2011.
Ferebee also revealed that IPS has $60 million in cash reserves, funds set aside for different programs that can’t be spent for a while. Those reserves are placed in regular checking accounts that aren’t drawing any significant interest. The Great Schools audit recommended that IPS look at ways of prudently investing some of the reserve funds to improve yields.
