Financial Transparency

In a series of town halls in 2015 and 2016, school leaders presented plans for $50 million in construction (with donations expected to cover some of that cost) to build WLIS and renovate portions of WLES and Jr/Sr HS. But, then the school board quietly borrowed $95 million between 2017 and 2020 for these construction projects, leaving our district with the 2nd highest level of debt per student in the state at over $53,000 (the 3rd highest in the state had just $39,000 in debt per student). Borrowing so much money all at once has left us without any additional ability to borrow and with increasing debt payments until 2038. The school board had announced plans to renovate Happy Hollow into an early childhood development center and promised upgrades to athletic facilities, but now there is no money left. School board members should have sought community input before deciding to borrow nearly twice as much as they said they would. Even worse, it is not at all clear where all the borrowed money went.

The recent audit (7:59) of our school finances found important deficiencies in the school corporation’s internal financial controls that resulted in millions of dollars of accounting errors. Not having policies and procedures in place to ensure that funds are used and accounted for appropriately prevents the school corporation from detecting fraud and correcting accounting errors. The audit also found that the school inappropriately kept some of the construction borrowing off the financial statement which had prevented auditors from seeing how the funds were spent. The auditors noted that “material misstatements and irregularities in the school corporation’s financial statement likely remain undetected.” My view is that how tax revenue is spent is public information and should be publicly available (the construction spending since 2017 is still not publicly available). We need an independent investigation of the recent school spending, especially the millions in off-the-books construction spending, to account for how the $95 million was spent. The lack of financial oversight from the school board should be acknowledged and new procedures should be put in place to prevent these financial issues from occurring in the future. This would go a long ways towards restoring trust.

I submitted monthly requests for the school corporation’s accounts payable report which lists each payee, the amount, and a brief description for all the on-the-books accounts. The school corporation redacted the documents and didn’t include some pages in my first few months of requests. School board members publicly complained that my monthly requests were costly and imposed an unfair burden on the schools. I continued and posted each report to the documents page of my website and reviewed each one to better understand how school funds are being spent. Finally, in September 2021, the school board decided to “voluntarily” post the accounts payable report each month to the school website, which it turns out is not very difficult or costly. The reports show several obvious financial issues. One example is that the school board was paying its lawyer about $300,000 per year for just 20 hours of work per week. When I made this public, community outcry forced the board to review its legal expenses and then eventually replacing him in August 2022.

It used to be that the school board would blame the state legislature for not letting them spend money in a way that makes sense. The claim was that state had set up budget silos that were forcing the school board to make bad financial decisions. There is good evidence that this was true years ago, but it certainly isn’t true now. Transfers are allowed between the different funds if approved at a public meeting of the school board. That breaks down the silos. But, the really big source of flexibility is that referendum funds can be used for “any lawful school expense” (I.C. 20-40-3-5). This is a big deal. It means that the referendum fund’s nearly $8 million in revenue each year can be spent on pretty much anything the school board decides: teachers, programs, administration, special education, building maintenance, transportation, or new construction. The school board gets to determine what we will prioritize. Rather than hiding financial information, the school board should provide public access to all financial documents and should explain the reasons for its financial choices.

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