The Howard County Public School System is in the process of hiring an independent auditor to review its budgeting practices since 2010 to find out how its health and dental fund reached an approximate $23 million deficit and in possible misuse of grant funding.
Rafiu Ighile, chief business and technology officer, said the interim superintendent and Board of Education made the decision to hire an independent auditor voluntarily. The school system is reviewing responses to their request for proposal from about eight firms.
The forensic audit – an in-depth review of budgeting practices to determine possible misappropriation – would cost between $70,000 and $150,000 depending on the firm, Ighile said. The school system hopes to have the audit completed by late January, early February before its budget is submitted to County Executive Allan Kittleman.
“This decision was made based on what has been going on with the school system for the past couple of years,” Ighile said. “The board and administration did not trust each other. We knew contracts had been awarded that never went to the board even though there are requirements with most contracts that those $25,000 and above should go to the board.”
Affected costs included the health and dental fund, which reached a $23 million deficit in June. The fund accounts for employees and retirees’ health insurance, life insurance and voluntary benefits.
School spokesman Brian Bassett said actual claims costs have not been fully funded in the general health and dental fund. According to previous budgets, funds are collected through contributions from other funds, employee withholdings and retiree payments.
Under former superintendent Renee Foose, the school administration attributed the deficit to rising claims costs and lack of fixed charges funding, as stated in the executive summary of the fiscal year 2018 budget proposal in January.
Ighile said the forensic audit will determine how and why the fund suddenly declined, beginning in 2010, although it was balanced at over $20 million.
“For some reason, we couldn’t keep up with the costs of our obligations,” he said. “Then, the health and dental fund was no longer funded at the level that was required. This didn’t happen over night. What caused this?”
Bassett said school officials also learned that its grant funding “may have been used beyond the scope of the grant.” An example was when Ighile said he discovered an employee was being paid for working on a grant they weren’t actually working on.
The error was corrected immediately, he said.
“If there’s any impropriety, let’s find out what they are now and then right the ship,” Ighile said. “That will give a comfort level to both the board and the superintendent that we’ve done everything we can, so we don’t want anything coming up a year from now.”
Bassett said the school system hopes that audit will create “a clean slate” as it begins the budgeting process.
“It is important that Howard County taxpayers trust that the public school system is using funding appropriately and effectively,” Bassett said.
In March, the county’s auditor, Craig Glendenning, released results from a financial audit on the school system after reviewing financial statements for special education, the health and dental fund and legal services. The audit created tension between the County Council and Foose, who questioned the legality of the audit and said in a letter that the county’s auditors went outside the state law by conducting a performance audit.
Auditors noted that revenues in the health and dental fund did not keep up with expenses, and between fiscal years 2014 and 2015, health care and prescription costs jumped from 9 percent to 37.6 percent, with contributions from employees increasing by 4.6 percent.
Ighile said he was unaware of any previous forensic audits within the school system, and the latest audit’s results will be presented to the board once concluded.