Audit reveals money, safety issues with Bay District – WMBB – mypanhandle.com

PANAMA CITY, Fla. (WMBB) The State of Floridas most recent annual operational audit of Bay District Schools found 10 issues with policies and procedures.

Floridas Auditor General pointed out some issues impacting student safety and others questioning how the District spent millions of dollars on construction projects after Hurricane Michael.

By coincidence, the audit was released just as District leaders are asking voters to approve a tax increase. If approved the money raised through a millage rate increase would go to help to pay for staff salaries increase, school safety costs and other important items, officials said.

One of the discrepancies in the audit involved school safety funding under the Marjorie Stoneman Douglas Act.Under the funding guidelines, school district officials are required to conduct fire and school shooter drills, as well as background screenings of all contractor workers. Bay District School officials did not meet all of the requirements.

The agency also took issue with the districts record-keeping on $5.9 million in sales surtax money, its subcontractor payment process, and, in a separate issue, its records on $54.8 million spent with six contractors for District remediation projects.

The main point of disagreement is not so much how the money was spent as whether or not the district had the proper legal authority to spend it under a Hurricane Michael emergency order issued by Gov. Ron DeSantis. Its an ongoing argument and, so far, neither side is backing down.

Other irregularities involve administrators failing to account for all of the money spent by employees using purchasing cards, failing to post all of the budget data in the District web need as required by law, and insuring ineligible dependents in the Districts self-insurance program for employees, retirees, and dependents.

The district issued a response to auditors on these issues. That written response is signed by Superintendent Bill Husfelt. News 13 also took the audit to the district and asked for more clarification and their responses are included below. Finally, it should be noted that the audit is designed to look at procedures and methods by government agencies. There are no fines or other consequences associated with the results.

SCHOOL SAFETY

The audit found that the district did not hold all of the 14 required active shooter and fire emergency drills from August of 2019 through February of 2020. The district did not verify that school officers were present each day at the districts 10 charter schools.

District officials said they did not believe they were responsible for the charter schools personnel. The District also did not have records of whether or not Bay County Sheriffs deputies who work in the school system have completed their required mental health crisis intervention training.

District officials noted that the school was not even in-session on campuses for three months due to COVID-19 and did not conduct all of the required drills. The district also claims it has now improved its record-keeping and is working with the sheriffs office to ensure the training is completed.

The real question related not to whether or not we actually conducted the drills but whether or not all of the related paperwork could easily be located by the auditor, said Josh Balkom, BDS Executive Director of Operational and Support Services. Our schools were literally closed down and no drills occurred during three months included in this audit.

He added, we understand the auditors notes and have taken steps to ensure the paperwork is more readily accessible and can be checked by third parties.

Another issues highlighted by auditors was required background screenings on contractors and other adults working on campus. The required screenings were not done for at least seven workers over the last five years.

We take this responsibility very seriously and screened more than 220 contracted employees during the audit period of July 2019 through February 2020, Balkom said. This finding actually relates to some of our contracted employees who work for companies like PanCare and ChartwellsK12. In all cases, the employees had been screened but their badges had expired and soon as this was brought to our attention we both adjusted our procedures and rescreened the employees in question all of whom passed the background check successfully.

In response, district officials said they will improve their procedures and consistently check the backgrounds of these employees.

FINANCIAL CONCERNS

Auditors say the district took money from the wrong part of its budget, its discretionary sales surtax, to pay $5.9 million for modular classrooms after Hurricane Michael. In response, the District said it was acting under Gov. Ron DeSantis emergency order which suspended certain requirements. However, auditors said the emergency order did not apply to school districts and that their recommendation stands.

The same disagreement is behind another of the auditors findings. The district does not have certified copies of payment and performance bonds from six contractors who did $54.8 million worth of work following Hurricane Michael. Those contractors are Cotton, Northstar, Servpro, Southern Cat, and GAC, district officials said.

Again, the District argues that it was acting under the Governors Executive Order and also notes that halting all the projects in order to identify all the costs and the scope of the work would have prevented the recovery for an extended period of time.

Bay Districts attorney, Heather Hudson, said the district acted within the law.

The Supreme Court of Floridas opinions, as far back as eight decades, include references to school districts as political subdivisions, she wrote. I feel confident that the School Boards remediation contracts immediately following Hurricane Michael fall squarely within the bounds of actions to ensure the health, safety, and welfare of the community. The only way the District could have possibly addressed its facilities throughout the county before they became public health issues filled with mold and/or attracting all sorts of nuisances, was to immediately remediate the structures to the best of your ability.

Hurricane Michael required the district to move quickly, officials added.

We are very familiar with the bond requirements in place, said BDS Chief Financial Officer Jim Loyed, but after the extreme devastation of Hurricane Michael it was impossible to even put a dollar figure on the amount of bond required normally because the dollar amount of the mitigation needed immediately was not known at the outset. We needed to get the contractors in as soon as possible to begin the clean up so our students could return to school and no one knew on day one what they would find or the true extent of the damage.

Even though there are no real-world consequences to the auditors report District leaders say they are continuing to dispute the findings. Those discussions between the district and the auditors continued on Friday, officials said.

The audit also found that the district was not sufficiently monitoring payments to subcontractors and that they could not confirm that services were obtained at the lowest cost with acceptable quality. Auditors called into question $281,535 in spending on an $8.2 million project.The district said the project in question did not go over budget and that subcontractors were properly paid.

At the time this contract was let, the general conditions of the contract did not require line item invoices for approval, it was a lump sum cost said BDS Director of Facilities Lee Walters. And, on all construction projects, third party inspections by licensed building officials are completed and those inspections must be approved before the certificate of occupancy is issued and the building can be occupied.

Design engineers also complete inspections ensuring that the projects were built as designed, Walters said.

This concern from auditors comes after federal charges were filed in Lynn Haven over fraud with contractors and construction projects following Hurricane Michael. As part of that ongoing investigation, federal prosecutors demanded thousands of documents related to construction projects done by Bay District, Bay County, Panama City Beach, and Panama City. District officials said some of the documents in the audit were also requested in the subpoena. They also noted that those documents have been provided both to the FBI and to the media. And they say, ultimately, the two issues are in no way related.

OTHER CONCERNS

The audit stated that the district must improve how it handles self-insurance healthcare claims, determines dependents eligibility for health insurance, and monitors purchasing cards that are distributed to employees to buy work related items.

We do not disagree that improvements in process can always be made, Loyed said. But the truth is we are always going to err on the side of supporting our employees and giving them as much grace as possible to provide supporting documentation because we know that health insurance is critical to so many.

The districts insurance claims have been audited by two other independent entities and no one has found any evidence that non-covered employees or family members received services to which they were not entitled, he added.

Finally, the audit noted that the district was required under state law to post financial data to the web. The data is meant to enable taxpayers to evaluate the financial efficiency of the District. However, district officials said they could not meet this requirement.

It was impossible to meet the State requirements this year since (The Florida Department of Education) did not provide us with the required information until after the deadline.

The district added that it would meet the requirement when it received the information.

As soon as the state provides us with the required information, we post that to our website, Loyed said.

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Audit reveals money, safety issues with Bay District - WMBB - mypanhandle.com