NOLA Public Schools' West Bank headquarters.

A financial auditor outlined seven findings in a state-required review of the Orleans Parish School Board’s 2020 finances at a special committee meeting Tuesday, held to review the district’s audit. The 2020 audit, which was originally due at the end of last year, has not yet been completed.

A representative of the board’s auditing firm, Tiffani Dorsa of Postlethwaite & Netterville, said there had been “no evidence of misappropriation of funds” but outlined seven areas of concern.

“All of these findings are really related to finances and reporting in alignment with generally accepted accounting standards,” Dorsa said.

The auditors found that the school board violated state budgeting law by overspending from certain of its funds above what was budgeted, improper reporting of spending from federal grant funds and inaccurate or incomplete financial records of tenants’ leases and rental payments for OPSB-owned office space, meaning that they could not verify that all rental income was collected. 

OSPB Finance Committee Chair John Brown Sr. and other board members said they were concerned about the issues. Brown asked NOLA Public Schools Chief Financial Officer Stuart Gay for clarity.

“It’s good to hear we had no misappropriations, but it seems Mr. Gay found a number of issues when he arrived,” Brown said, asking which two or three issues were most concerning.

“They’re all important but they all tie back to what we need to do the most — be good financial stewards,” Gay said. “The dollars flowing to charter schools is absolutely critical to me.”

One of the findings — which district officials alerted the board about in March — was related to a law passed in 2019 that dedicates certain special tax dollars to charter schools on a per pupil basis. The district distributed the funds one year too early, Gay said. Low tax collections during the pandemic only complicated the problem. 

“We definitely spent a lot of time this year on the $100 per pupil … as well as everything happening this past year with financial projections,” Gay said. 

The auditor, Dorsa, detailed several problems to the board in a condensed presentation.

“During our review of lease agreements … we noticed there isn’t a collection process in place,” she said, noting that could mean missed rent collections.

The district also violated the Louisiana Local Government Budget Act, Dorsa said, because several district funds had a negative balance that was more than five percent different than the approved budget. Auditors said the board didn’t misspend any money. It simply failed to amend its budget to reflect the needed expenditures. 

“Six of the funds had negative fund balances,” she said. “You’re really not showing a true picture of the fund balance, because that’s what’s going to fund them.”

“This is not misappropriation — this is just misclassification,” she said.

For example, Gay explained during questioning, the $5 million in emergency funding approved by the board for student technology early on in the pandemic was never adjusted in the overall budget. 

“We basically did half of that right,” Gay said. “What we needed to do was amend the budget.”

The audit was due Dec. 31, 2020. However, the district has received multiple extensions from the Louisiana Legislative Auditor’s office.

Board members worried about the district’s ability to finish the current audit while preparing to close the books on the current school year. 

“At this point, would you say we’re on time to complete a timely audit for this fiscal year?” board member Olin Parker asked.

Gay said the findings in the current audit should put them on a better path to completing the next audit. He said the district is reworking its financial systems.

Ideally, Gay said, the staff wants to have future audits submitted by the end of each audit year.

“On an ongoing basis we should be able to submit timely and that’s the plan we’re working towards.”

Board member Katie Baudouin asked if the board will be able to fix the problems identified by the auditors. Gay responded that the school district is looking to hire some outside contractors to assist. 

“Is any of this going to affect our fund balance?” board member Nolan Marshall Jr. asked.

“All of these will affect your fund balance,” Dorsa said.

Board members said they hoped the findings and auditing firm guidance would offer an opportunity for a fresh start.

Asked when the audit would be submitted, Dorsa said it could only be done as fast as the district provided information. But she thought they would complete it by their extended deadline of June 30, the end of the 2021 fiscal year.

Marshall asked that the district consider working with Dorsa’s firm to establish guidelines for board members to ensure finances were on track throughout the year. 

“We as board members, I’ve been here eight years and every year we’ve had an audit and people in this district that gave us information with errors,” Marshall said. “What I would like to see is the board working with your firm to understand what checks we can put in place as a board, and what we should be looking for at the end of a quarter.”

“I’d like to see something in place for future board members, so when they come on board we can say to them this is how you handle your financial responsibilities,” Marshall said. 

Marta Jewson

Marta Jewson covers education in New Orleans for The Lens. She began her reporting career covering charter schools for The Lens and helped found the hyperlocal news site Mid-City Messenger. Jewson returned...