Numerous financial issues plagued Sumter County Schools in the 2023 fiscal year, a recent state audit found, painting a picture of just how messy the district’s finances were in the months leading up to state intervention.

The audit, published by the Alabama Department of Examiners of Public Accounts on June 21, found several flaws with the district’s bookkeeping practices, as well as a failure to submit required reports tied to thousands of dollars of federal pandemic relief funds.

Among the findings:

• The district was three months late to submit 2023 financial statements to the Alabama State Department of Education 
• The school board did not elect a budget committee required by state law
• Staff improperly filed employee tax forms, costing the district $43,322 in fees to the IRS
• Staff failed to pay invoices and complete bank deposits in a timely manner and did not properly post local school receipts to accounting records
• Staff had not taken inventory since the 2021 fiscal year
• The district did not complete required spending reports for employees supported by $192,542 in federal Covid-19 Education Stabilization Funds

The Alabama State Board of Education voted to take over the small, west Alabama school district in August 2023, citing its inability to complete a previous audit. The school district also has struggled with declining enrollment, facility conditions and poor student test scores for years.

“One of the primary reasons that we went into Sumter County last August was accounting difficulties and we knew it would take more than a few months to straighten out their books and establish new accounting protocols,” State Superintendent Eric Mackey recently told AL.com. “This has been one of our priorities and they are making great progress in that area of focus.”

“The audit recently discussed is for the year ending September 2023, and we only took over operations in August 2023,” he added. “But, I am confident that the system is making great progress and is cleaning up its books, among many things that are going better than they were just a year ago.”

Superintendent Marcy Burroughs, who was tapped last summer to lead the district’s turnaround, announced several big plans this year, including academic interventions, a school merger and $10 million for facilities improvements.

As of June, the district had a remaining balance of about $7.7 million, up from just over $5 million a year ago, according to the district’s latest financial reports.

The 2023 audit covers the period between October 1, 2022 through September 30, 2023 and was completed on May 20, 2024. District leaders said they have taken several steps to rectify issues this year.

“The books were in such disarray prior to state intervention that they couldn’t be audited,” John Heard, who was appointed by the state to act as the district’s chief administrative officer last summer, said in an email.

“The staff needed a couple of months just to determine how much money the system actually had, and which account it should be coded to,” he said. “There was no CFO or federal programs coordinator. No bookkeeper had more than two years of experience. The high school and one elementary school did not have a principal. There was no accountability and there was systematic failure for all those responsible for planning and operating a budget.”

Heard said standard accounting procedures have since been put in place so that auditors were able to complete their work. Financial statements are now being posted monthly and detailed financial information is now available for planning and monitoring.

The district was operating without a permanent chief financial officer until November, he added, but one now has been hired to oversee those operations.

The audit classified most of its findings as “significant deficiencies,” or issues in need of urgent attention. Auditors gave the district a “material weakness,” which is a more severe classification, for failing to properly report pandemic relief spending.

The district spent a total of just over $3 million in pandemic relief funding in 2023, the audit shows. Of that amount, just under $193,000 in personnel expenses were not properly reported.

Two schools, Sumter County High and Livingston Junior High, also failed to comply with some standard bookkeeping procedures, including turning in receipts and bank deposits in a timely manner, auditors found. Recordkeeping issues are fairly common in school district audits, but they can lead to a serious risk of loss or theft if they go unaddressed.

In a response to auditors, Burroughs said the district has made several changes to its financial and record keeping processes, including implementing weekly meetings between school leaders and the district’s accountant. That started in April, she said, and will continue when the new school year starts back.

The school board elected a budget committee in October, she added, and staff are working to correct several years’ worth of missing or misreported records noted in previous audits.

Mackey said he anticipates a much better audit next year, but cautions that it will still take time to fix outstanding issues.

“That is, after all, the process of intervention,” he said. “When it’s all cleaned up and pretty, we will leave the intervention, and they are not nearly ready for that yet.”