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No problem with Sullivan federal school funds, Tennessee Department of Education says

Rick Wagner • Aug 3, 2018 at 7:00 PM

BLOUNTVILLE — Sullivan County Schools’ director and business manager said they have been “assured” by Tennessee auditors the state has no “issues” with how the system has handled federal funds over the past three years.

A state Department of Education spokeswoman confirmed that Friday, but an auditor who a school board member says told him there was a problem and the auditor’s boss could not be reached for comment.

“We have been assured there are no questions or issues regarding the finances of our school district,” Director of Schools Evelyn Rafalowki said in an interview with her and Budget Manager Ingrid DeLoach Friday morning. 

They were responding to a claim made Wednesday during a called school board meeting by board member Mark Ireson, who said that an auditor told him more than $1.1 million in federal funds was handled improperly by being carried over from a past year and might have to be paid back.

Ireson was arguing for a second delay in awarding the bids for the new West Ridge High School. However, the board voted 5-2 for the main bid of almost $54.5 million and 5-2 with one abstaining for the outdoor athletic facilities bid of $4.8 million.

“It is a very confusing issue,” DeLoach said of federal funding for special education and economically disadvantaged students. 

“I could see where some terms were misunderstood,” DeLoach said. “I have talked with Dustin, and she does not see any misuse of federal funds.”

WHO IS DUSTIN?

DeLoach was referring to Dustin Winstead, regional fiscal consultant with the Office of Local Finance of the Department of Education. Ireson said he talked to her Wednesday before the 5 p.m. called meeting.

Rafalowski and DeLoach referred questions Friday to Maryanne Durski, executive director of that office. But Chandler Hopper, deputy director of communications for the Tennessee Department of Education, responded to an email question asked of Durski.

“I’ll have to talk to Dustin again,” Ireson said Friday.

“When she pulled up the information, it was troubling to her,” Ireson said. “I am very happy that they already have looked at that.”

Ireson said he hopes there are no problems, although he fears there will be — if not with federal programs, with other fiscal items he mentioned as part of a projected $20 million-plus in likely financial obligations. 

“The department monitors a selected number of districts each year for compliance with federal regulations around the use of federal funds received by the school district,” Hopper wrote. “Sullivan County was monitored on-site for fiscal compliance in the fall of 2016. At that time there were no findings. In fiscal year 2017-18 Sullivan was desktop monitored for program compliance, again with no findings. The audits that we reviewed for the last several years also had no findings and resulted in clean audits each year.”

Ireson said during the meeting that the money was supposed to go back each year so it could be distributed to other systems.

“You are approved to spend up to that much and then are required to request reimbursement for what you spend,” DeLoach said.

The system does carry over approved amounts from budget year to budget year, but she said those carryovers must be spent first, and if they go unspent eventually are reassigned to another district.

WHAT DID RECENT AUDITS FIND?

Rafalowski and DeLoach shared the most recent state audit of the school system’s budget, which had no findings and included a look at the federal funding. They said state auditor Robert Anderson, from the Comptroller of the Treasury’s Division of Local Government Audit, is in Blountville six to eight months a year looking at the overall county budget and school system budget.

In addition, an independent audit by Blackburn, Childers & Steagall, which includes individual schools and the handling of federal funds, found no discrepancies.

An on-site or “physical” audit of federal funds is to take place for 2018.

The 2017-18 state audit is expected between September and December, Rafalowski and DeLoach said. The 2015-16 audit had one finding, the 2014-15 none.

Ireson said the school system might have to use its general purpose fund balance to repay the federal budget funds of $1.1 million, but Rafalowski and DeLoach said the money is released only as a reimbursement. 

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