Michelle Glover hopes to strengthen the Baker School District’s financial controls before leaving her job as the district’s business manager in June.

The Baker School Board accepted Glover’s resignation during its Jan. 21 meeting. She has taken a similar job with the La Grande School District.

Glover said she and her husband, Alan Glover, will continue to live in Baker City. Alan will keep his job with the school district’s maintenance staff and Michelle will commute to La Grande.

While Glover says she is leaving her job with the Baker School District because it was not a good fit for her personally, she looks forward to accomplishing as much as possible with what she calls her “incredible team” in her remaining five months in the position.

Some of the tasks were laid out in a management letter that accompanied an audit of the district’s financial records presented by the Eide Bailly auditing firm, which has its headquarters in Rancho Cucamonga, California, and an office in Boise. Royce Townsend and Kirtan Shah presented the report during a Board work session prior to the start of the Jan. 21 meeting.

Townsend said the auditing firm issued the District an “unmodified” opinion — the highest assurance provided — in its audit report, in which no material weaknesses were identified.

In its first year of conducting the District’s audit, the work was performed with the limitations of the coronavirus pandemic and the report was presented in a Zoom computer session.

Townsend and Shah next presented the management letter, which Glover said will be her guide for the work she hopes to accomplish as she ends her tenure with the Baker School District.

A management letter lists the auditors’ recommendations for how an agency can improve its internal financial controls.

Although Glover was disappointed that the auditors were not able to work in person with her team to better test the District’s financial security controls, she still was satisfied with the results.

“I think we do have an auditing firm that will hold us accountable,” Glover said.

She was pleased that the auditors had issued a management letter, something that had not been done by the District’s former auditor, Solutions, a John Day accounting firm.

“I called them on the carpet for their practices,” she said of the John Day auditors. “They had never done a letter, but they admitted the weaknesses were there and we never had a letter. It was super disappointing. You should always have a management letter if your audit firm is doing a good job.”

Glover agreed with the Eide Bailly auditors, who stated in their letter that although the issues they noted did not meet the threshold to be included in the audit report itself, they provide “opportunities for strengthening internal controls and operating efficiencies.”

Superintendent Mark Witty, pointing to the favorable unmodified opinion provided by the auditors in their review, agreed that the management letter offers recommendations on how the District can improve its financial systems and lower its risks.

First, the auditors pointed to employees’ inconsistent use of purchase orders for daily transactions, and recommended that employees follow Board policy.

That policy requires employees to use purchase orders for all purchases to ensure transactions are reviewed and approved in advance and that there is enough money budgeted to pay for the purchase.

“Change in this district is difficult,” Glover said. “Trying to enforce Board policy and getting people to follow proper procedures has been a challenge.”

She’s hoping the Eide Bailly firm will help the District overcome that.

The company was one of four interviewed to provide the District with auditing services in March 2020. The District has a three-year contract with the firm, with the possibility of an extension after that.

“I think it’s going to be a good fit,” Glover said. “Their hearts are in the right place and I think they’re going to hold people accountable.”

In past jobs, Glover said she has seen the purchase order issue resolved with one or two incidents in which the employee who failed to follow the policy had to pay for their item.

“It only takes one or two times of saying ‘thank you for your contribution to the district,’ ” she said.

In the past year, the District has undergone a complete rewrite of Board policy regarding purchasing, Glover said.

The District’s Safe Schools training system, which is used for statewide training on issues such as blood-borne pathogens or sexual harassment, also includes internal training on topics such as policy review. The system was used to send the new purchasing order policy out to every employee asking them to acknowledge that they received and read the information.

Glover said most staff members appreciated knowing what procedures they’re expected to follow.

The auditor’s management letter also noted a number of “stale dated checks” from the District’s general operating checking account, some dating back as far as 2010. These are outstanding checks that might not have been cleared on the bank reconciliation or were not cashed.

Checks that are outstanding should be canceled so unauthorized people can’t cash them, or reviewed to determine if they were cashed by the vendor and not cleared on the bank reconciliation, the auditors recommended.

Glover said she plans to track down the checks, which total about $350,000.

“We do have records,” she said. “We’ll have to go back and do the research. All along our audit firm should have been calling that out.”

Baker Technical Institute

The auditors also pointed to deficit spending by the Baker Technical Institute — money beyond its allocated budget — as an area that needs improvement.

This year that total was about $142,000, Glover said.

“While communication issues have improved regarding the Baker Technical Institute (BTI), there continue to be opportunities for improvement to meet timeliness for monthly and year end closing procedures,” the auditor’s management letter states.

“When we’re closing the books we need to get information,” Glover said. “When you can’t, it’s hard to manage the resources of the District.”

Glover said the District recently signed a memorandum of understanding with BTI, whose president is Doug Dalton, who also served as the District’s chief financial officer from 2009 to 2017.

“We need them to communicate what they’re doing before they do it,” Glover said. “Now they have it in writing: This is how you agreed to operate.”

Superintendent Witty said he believes some of the issues related to BTI are tied to rapid growth of the program, which offers classes such as welding, heavy equipment operation and truck driving.

“Whenever you grow something as fast as we’ve grown BTI, you’re always trying to catch up,” Witty said. “Some of that is growing pains.”

He said the Board’s approval of the memorandum of understanding and a service agreement between the District and BTI is part of addressing the issues noted.

“We’re getting pieces in place to shore up those systems,” Witty said.

Other issues

The Associated Student Body (ASB) bank account at Baker High School also was shown to be out of compliance with requirements.

Glover said the issues that arose in the ASB account were not the fault of the staff directed to handle the funds. She blamed the District and lack of professional development provided to those employees for the errors. She said they have been able to gain training provided in Zoom meetings offered by the Oregon Association of School Business Officials.

The District will work with the audit firm in March to continue to straighten the matter out, Glover said.

The issue involved money from unrelated accounts, including a faculty account, coaches fund and BHS teachers supply fund, being placed in the ASB account.

Only money that the student body controls should be included in that account, Glover said.

“Once you deposit money in the account, the student body owns the funds,” she said.

The District has made changes regarding most issues from prior year audit findings, including the way it handles payroll processing documentation, review and approvals; journal entry documentation review and approvals; and ongoing maintenance of the depreciation schedule.

In an overview of the financial statements included in the Management’s Discussion and Analysis for June 30, 2020, the report states that the cost of the District’s governmental activities for the year was $45,748,501.

The amount taxpayers funded through local property taxes totaled $5,275,798, the report stated, because the remaining cost of $417,905 was paid by those who benefited from the programs or by other governments and organizations that subsidized certain programs with grants and contributions totaling $3,348,591.

The District paid the remaining “public benefit” portion of the governmental activities with $39,186,232 in state school funds, and with other revenues, such as interest and general entitlements.

Regarding the District’s general fund, the report noted that the fund balance increased from $4.94 million to $7.75 million.

“This increase is mainly due to savings experienced from the COVID-19 school closures, participation in the Work Share Oregon unemployment program (in which employees were furloughed one workday a week during May 2020 as a cost savings) and growth in sponsored charter schools,” the report states.

The special revenue funds remained “fairly stable” with a net increase of about $419,000, which is attributed to increased contracted special education services.

Capital project funds also remained stable from the prior year, showing a net decrease of about $206,000 due to the Baker Early Learning Center capital project.

The debt service funds showed a decrease of about $97,000 that went to the PERS (Public Employee Retirement System) bond debt service payments.

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